Firms follow the price determined by market equilibrium of supply and demand and are price takers. The marginal revenue curve is a horizontal line at the market price, implying perfectly elastic demand

Is marginal revenue the same as demand?

Marginal revenue — the change in total revenue — is below the demand curve. Marginal revenue is related to the price elasticity of demand — the responsiveness of quantity demanded to a change in price. When marginal revenue is positive, demand is elastic; and when marginal revenue is negative, demand is inelastic.

Does marginal revenue depend on demand?

The calculation of Marginal Revenue is dependent on supply and demand, and on the type of market as well, such as Perfect Competition or Monopoly. In a perfectly competitive market, which comprises.