Eco 202 Assignment With the aid of diagram explain the firms demand and revenue curve in a perfect competitive market. To be submitted Tomorrow, Thank you.

For an individual firm in perfect competition, the demand curve is perfectly elastic, meaning it is a horizontal line at the prevailing market price. This is because the firm can sell any quantity of its product at the market price, but if it tries to charge even a slightly higher price, it will lose all its customers to competitors.

• Total Revenue (TR): This is the total income a firm receives from selling its output. TR = Price (P) × Quantity (Q) Since the price is constant for the firm, TR increases proportionally with the quantity sold.
• Average Revenue (AR): This is the revenue per unit of output sold. AR = TR / Q = (P × Q) / Q = P Thus, the average revenue curve is identical to the firm's demand curve, which is the market price.
• Marginal Revenue (MR): This is the additional revenue gained from selling one more unit of output. MR = Change in TR / Change in Q In perfect competition, since the firm sells each additional unit at the constant market price, the marginal revenue is always equal to the price. MR = P Therefore, for a perfectly competitive firm, the demand curve, average revenue curve, and marginal revenue curve are all the same horizontal line at the market price: Demand = AR = MR = P.

Imagine a graph with Quantity on the horizontal (X) axis and Price/Revenue on the vertical (Y) axis.

• The firm's demand curve (D), average revenue curve (AR), and marginal revenue curve (MR) are represented by a single horizontal line at the market price (P). This line indicates that the firm can sell any quantity at this fixed price.
• The total revenue curve (TR) starts from the origin (0,0) and slopes upwards in a straight line. Its slope is constant and equal to the market price, reflecting that total revenue increases linearly with each additional unit sold at the constant market price.