Q.

If the average revenue is a horizontal straight line, marginal revenue will be -

A. U shaped
B. Kinked
C. Identical with average revenue
D. L shaped
Answer» C. Identical with average revenue
Explanation: The price of a good is also known as the Average Revenue of the firm. Average Revenue (AR) or Price and Marginal Revenue (MR) are identical. When the former is constant, the latter is also constant. More-over, the Average Revenue curve of a firm is the same as the individual demand curve. Hence, the competitive demand curve is a horizontal straight line parallel to the OX axis.
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