Multiple choice

Under which market structure, the average revenue of a firm is equal to its marginal revenue?

  1. Oligopoly

  2. Monopoly

  3. Perfect competition

  4. Monopolistic competition

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Average Revenue equals Marginal Revenue only when the firm faces a perfectly horizontal (perfectly elastic) demand curve. This occurs exclusively in perfect competition where firms are price takers. In monopoly, oligopoly, and monopolistic competition, the demand curve slopes downward, causing AR > MR at all output levels.

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