Monday, August 15, 2011

Pure Competition?

Marginal revenue will equal price in a perfectly competitive market. Monopolistic competition will have a profit maximizing price. Average revenue isn't a very useful figure. Marginal revenue will equal the change in Total revenue divided by a change in quantity of 1 unit. There aren't very many perfectly competitive markets. The closest example is the foreign exchange market because of all the arbitrage by speculators.

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