Question

In which one of the following types of markets are Average Revenue curve and Market Demand curve the same?

Options

• Monopoly

• Oligopoly

• Perfect Competition

• Monopolistic Competition

Answer 1

Perfect Competition

Explanation:

In perfect competition, the average revenue curve corresponds with the market demand curve since each firm is a price taker and sells their products at the market price, which is determined by market demand, resulting in a horizontal AR curve at this price.