Equilibrium of the firm – AR and MR having downward slope

 The following figure shows that the firm has a downward sloping demand curve or average revenue curve. The corresponding MR curve is also down sloping from left to right. The MC curve is rising. At point R marginal cost curve cuts marginal revenue curve from below. This is equilibrium position of the firm. The equilibrium […]

Equilibrium of the Firm – When AR and MR are horizontal.

 The figure given below the illustrate equilibrium of the firm. When AR is constant MR becomes equal to it. MR intersects MC at R and R1. At both these points MC is equal to MR. Point R can not be a determinate equilibrium point since beyond this point, the MC is lower than MR and […]

Equilibrium of a Firm

Equilibrium is a situation from where firm a firm does not want to deviate. Generally this happens when the firm is earning maximum profit since it is the most advantageous position, therefore the firm does not want to change its position. Thus it is the state of equilibrium. The equilibrium of a firm can be […]

Importance or Significance of Revenue Curves

The marginal revenue curve helps in the determination of firm’s equilibrium. It is the point of intersection between MR and MC curves which determines the point of equilibrium of a firm. Besides, to calculate the profit and loss of a firm, AR curve is essential. Thus AR and MR curves play an important role in […]

Average and Marginal Revenue Curves Under Perfect Competition

In Prefect competition every firm sells its output at a given price, and can sell as much as it likes at this price. Hence the firm’s average and marginal revenue become constant and equal. The corresponding AR and MR curve is one and the same and horizontal to the X-axis. Thus in perfect competition MR […]