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Market Equilibrium — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMarket Equilibrium1 Mark
Question
In monopolistic competition, which relationship is true from the following between AR and MR?
  1. AR = MR.
  2. AR < MR.
  3. AR > MR.
  4. None of these.
✓

Answer

  1. AR > MR.

Explanation:

Both AR and MR curves are downward sloping under monopolistic competition because a firm can sell more commodity by lowering the price. The MR curve is half of AR curve, i.e. AR > MR.

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