Draw the perfectly competitive market model which reflect the following question and answer the question. The demand curve for a firm in the perfectly competitive market model is equal to its: Group of answer choicesmarginal cost curve.marginal revenue curve.average total cost curve.average fixed cost curve.
Question
Draw the perfectly competitive market model which reflect the following question and answer the question. The demand curve for a firm in the perfectly competitive market model is equal to its: Group of answer choicesmarginal cost curve.marginal revenue curve.average total cost curve.average fixed cost curve.
Solution
The demand curve for a firm in a perfectly competitive market model is equal to its marginal revenue curve.
Here's why:
In a perfectly competitive market, each firm is a price taker, meaning it must accept the market price as given. The price is determined by the intersection of the market supply and demand curves.
For an individual firm, the price it receives for its product is also the additional revenue it would receive from selling one more unit, i.e., its marginal revenue. Therefore, the firm's demand curve, which shows the quantity of the product it can sell at each price, is also its marginal revenue curve.
Unfortunately, I can't draw a diagram here, but you can easily visualize it. The market demand and supply curves intersect to determine the price. Then, for an individual firm, draw a horizontal line at this price level. This is the firm's demand curve and also its marginal revenue curve.
Similar Questions
In a perfectly competitive market the demand curve faced by an individual firm is: Group of answer choicesperfectly inelastic.relatively inelastic.perfectly elastic.relatively elastic.
Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm?Group of answer choicesThe perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies above its demand curve.The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies below its demand curve.The monopolistically competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a perfectly competitive firm lies below its demand curve.The marginal revenue curve of a monopolistically competitive firm lies below its demand curve; the marginal revenue curve of a perfectly competitive firm lies above its demand curve.
Assume that all firms in a competitive industry have cost curves given by the following: TC = 128 +8q +2q2. Further, the market demand curve is given by: p = 72-2Q. In the long run market equilibrium, each firm that remains in the market will produce:Group of answer choices2.4.8.40.More information is required to answer this question.
The supply curve in a perfectly competitive market is the sum of all of the individual firm’s marginal cost curves (using only the firms where the price exceeds the minimum of their short-run average total cost curve). What is the supply curve for a monopoly?Group of answer choicesA monopoly does not have a supply curveThe marginal revenue curveThe marginal cost curveThe demand curve
Draw the monopoly market model which reflect the following question and answer the question. The marginal revenue curve for a monopolist is __________________ its demand curve. Group of answer choicesAboveBelow
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