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why is the marginal revenue curve below the average revenue curve under imperfect competition ?
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Average Revenue
Average revenue is the revenue per unit of the commodity sold. It is obtained by dividing the total revenue by the number of units sold. Mathematically AR = TR/Q; where AR = Average revenue, TR = Total revenue and Q = Quantity sold. In our example, average revenue is = 500/100 = $5. Thus, average revenue means price.
Marginal Revenue
Marginal revenue is the addition to total revenue by selling one more unit of the commodity.
Algebraically it is the total revenue earned by selling ‘n’ units of the commodity instead of n-1. Thus,
MRn = TRn – TRn-1; where MRn = Marginal revenue of the nth unit
TRn = Total revenue of n units
TRn-1 = Total revenue of n-1 units
N = Any given number of units sold.
Suppose 5 units of a product are sold at a revenue of $50 and 6 units are sold at a total revenue of $60. The marginal revenue will be $60 - $50 = $10. It implies that the 6th unit earns an additional income of $10.
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why is the marginal revenue curve below the average revenue curve under imperfect competition ?
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why is the marginal revenue curve below the average revenue curve under imperfect competition ? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about why is the marginal revenue curve below the average revenue curve under imperfect competition ? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for why is the marginal revenue curve below the average revenue curve under imperfect competition ?.
why is the marginal revenue curve below the average revenue curve under imperfect competition ? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about why is the marginal revenue curve below the average revenue curve under imperfect competition ? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for why is the marginal revenue curve below the average revenue curve under imperfect competition ?.
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