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 […]
Tag: Total Revenue
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 […]
AR and MR curves under Monopoly and Monopolistic Competition (or Imperfect Competition)
In both the situations of monopoly and monopolistic competition a firm can have an independent price policy. In these market situations a firm can sell more goods at lower prices and would be able to sell less amount of goods at higher prices. Because of this reason AR and MR curves of the firm would […]
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 […]
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