ECON 103 Lecture Notes - Lecture 9: Market Power, Marginal Revenue, Demand Curve
Document Summary
Because no one will have impact on the price, and price are offer by the market, therefore if anyone want to charge a penny higher than the price, no one will buy their things. Because consumer think of one competitive firm as a perfect substitute for every other price taking firm. And to show this on the graph, you draw it as this. will also equal to the marginal and average revenuer for the firm. Then you will get the following equations: mr = tr / q. When a firm consider the market price as its demand curve, the demand curve. When you see a table like this you know immediately this is a price taking firm. We need to understand this graph to do well during the exam. This is a price taking firm (which means we are in a perfect competitive market) The demand curve = price = marginal revenue.