Answer:

## Perfect Competition and AR, MR, and TR Curves

Perfect competition is an economic model of market demand and supply in which there are multiple buyers and sellers, each of which are small enough to have no control over the market. The main characteristics of perfect competition are: multiple buyers and sellers, identical products, perfect information, and entry and exit of firms. This means that each firm sets the same price for its product and has no influence over the market.

## Average Revenue (AR) Curve

The average revenue (AR) curve is the price a firm charges for its product in a perfectly competitive market. The AR curve is a linear line that is equal to the price of the market, which is determined by the demand and supply of the market.

## Marginal Revenue (MR) Curve

The marginal revenue (MR) curve is the change in total revenue that occurs when one more unit of a good is sold. In a perfectly competitive market, the MR curve is a horizontal line, since the price of the market is determined by the demand and supply of the market.

## Total Revenue (TR) Curve

The total revenue (TR) curve is the total amount of revenue a firm receives when it sells a certain quantity of its product. In a perfectly competitive market, the TR curve is a rectangular hyperbola, since the price of the market is determined by the demand and supply of the market.

## Related Questions

• What is perfect competition?
• What are the characteristics of perfect competition?
• What is the average revenue (AR) curve?
• What is the marginal revenue (MR) curve?
• What is the total revenue (TR) curve?
• How does the price of a product in a perfectly competitive market affect the AR, MR, and TR curves?
• What is the difference between perfect competition and imperfect competition?
• What is the demand curve under perfect competition?
• What is the supply curve under perfect competition?
• How do changes in demand and supply affect the price in a perfectly competitive market?