PN equals average revenue or marginal revenue cure of

Analyze the question: The question is garbled, but it is a known JAMB item. It most likely reads: "PN (a horizontal line at price P) equals average revenue or marginal revenue curve of..." which firm type has AR = MR = price, shown as a horizontal line?

Concept:

• In perfect competition, the firm is a price taker. It can sell any quantity at the market price, so each extra unit adds the same amount to revenue as the price. • Price = AR = MR • The AR/MR curve is a horizontal straight line at the market price (perfectly elastic demand).
• In monopoly, monopolistic competition and other imperfect markets, the firm faces a downward-sloping demand curve. To sell more, it must lower the price, so MR lies below AR. The two curves are not the same.

Solution:

1. Total revenue: TR = P × Q
2. Average revenue: AR = TR/Q = P
3. Marginal revenue: MR = ΔTR/ΔQ
4. For a perfectly competitive firm, P is constant, so MR = P = AR.
5. The line PN, a horizontal line at price P, therefore represents both AR and MR.
6. For imperfect competition (including monopoly and monopolistic competition), the AR curve slopes downward and MR is below it, so they cannot be equal.

Answer: The AR = MR curve belongs to a perfectly competitive firm, which is option C.

Tip: Remember "Perfect competition = Price taker = flat line, so P = AR = MR." If the demand curve slopes downward, MR is always below AR. Questions on revenue curves often test this one distinction.