Equilibrium of the firm – Total Revenue and Total Cost Curves Approach.

Firm will be in equilibrium position at the level of output where its money profits is maximum. It can maximize its profits by producing at that particular level of output where the difference between total revenue and total cost is maximum. This can be explained with the help of a diagram. The above diagram shows […]

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 […]