Scanner - Revenue

N.C.E.R.T Question's

(Q1) Why is the total revenue curve facing a competitive firm a straight line passing through origin

(Q2) How does the TR change with output when MR is positive ?

(Q3) A perfectly competitive firm faces market price equal to Rs.15 .

(a) Derive its TR schedule for the range of output from 0 to 10 units
(b) Suppose the market price increases to Rs.17. Will the new TR curve be flatter or steeper ?

Q4) What is the relationship between Market price and MR of a price taking firm ?

C.B.S.E Question's

(Q1) Which concept of revenue is called price ?

(Q2) What changes in TR will result in (i) A decrease in MR (ii) An increase in MR

(Q3) What will happen to MR when (i) TR increases at a decreasing rate (ii) TR increases at constant rate ?

(Q4) Define MR, AR, TR ?

(Q5) Complete the table and Also plot the curves

CBSE 2008 + Sample Paper Questions

(Q1) Define marginal revenue. State the relation between marginal revenue and average revenue when a firm :

(i) is able to sell more quantity of output at the same price.
(ii) is able to sell more quantity of output only by lowering the price. (3)

(Q2) Complete the following table:

(Q3) Complete the following table:

CBSE 2009

(Q1) State true or false with reasons ::

(i) When marginal revenue is positive and constant, average and total revenue will both
increase at constant rate.

(ii) When total revenue is maximum, marginal revenue is also maximum.

(Q2) Complete the following table :

(Q3) Complete the following table :

CBSE 2010 + Sample Paper Questions

(Q1) State true or false. Give reasons for your answer : When marginal revenue is contant and not equal to zero, then total revenue will also be constant.

(Q2) Explain the relation between marginal revenue and average revenue when a firm is able to
sell more quantity of output (4 M)

(i) at the same price.
(ii) only by lowering the price.

CBSE 2011 & CBSE 2012

(Q1) Draw in a single diagram the average revenue and marginal revenue curves of a firm which can sell any quantity of the good at a given price. Explain. (3 marks)
OR
Explain the relation between average revenue and marginal revenue of a firm which is free to sell any quantity at a given price. (3 marks)

(Q2) What is the behaviour of Marginal Revenue in a market in which a firm can sell any quantity of the output it produces at a given price ? (1 mark)

(Q3) State True or false

(i) When MR is zero , AR will be constant
(ii) MR is always the price at which the last unit of a commodity is sold   CBSE (D)

SAMPLE PAPER 2014-15 & 15-16 & 16-17

(Q1) State, with valid reasons, which of the following statement are true or false: (a) Average Revenue curve under the Perfect Competition is a downward sloping curve. (b) When MR is falling but positive, TR will also be falling and positive. (6)

Ans: (a) False; (b) False

Explanation: (a) Under perfect competition an individual firm is a price taker. The firm faces the market price as given, so average revenue (AR) equals price and does not change with output. Therefore the AR curve is a straight horizontal line parallel to the x-axis, not downward sloping. (b) If marginal revenue (MR) is falling but remains positive, total revenue (TR) still increases with each additional unit sold; it rises at a decreasing rate. Thus TR is rising (positive), not falling.

C.B.S.E  2013

(Q1) Define marginal revenue. (1 M)

Ans: Marginal revenue is the addition to total revenue when sales are increased by one unit.

(Q2) When will Marginal Revenue be negative ?

Ans: Marginal revenue is negative when selling one more unit of output causes total revenue to fall.

C.B.S.E Paper 2014

(Q1) Why is average Revenue always equal to price ? (3M)

(Q2) Define marginal revenue. (1 M)

(Q3) How is marginal revenue (MR) calculated ? (1 M)

(Q4) What is meant by Revenue in microeconomics ?

Ans: Revenue is the receipts from sale of a good or the market value of the output produced.

(Q5) State the relationship between average and marginal revenue ?

(Q6) Under what market condition does average revenue always equal to marginal revenue ?

Ans: When a firm can sell any quantity at the given market price (perfect competition), average revenue (AR) equals marginal revenue (MR) at all output levels. This is because price equals AR and remains unchanged as output increases.

C.B.S.E Paper 2015

(Q1) Define Average Revenue. Show that Average Revenue and Price are same.

(Q2) Complete the following table : (D)

(Q3) Why is average revenue curve of a firm parallel to x-axis under perfect competition ?Explain. [AI (C)]

Ans: Under perfect competition an individual firm is a price taker and cannot influence market price. The firm can sell any quantity at the market-determined price, so average revenue (AR) remains constant as output changes. Thus the AR curve is a horizontal line parallel to the x-axis.

(Q4) Why is average revenue curve of a firm negatively sloped under monopolisticcompetition ? Explain. [AI (C)]

Ans: Under monopolistic competition a firm has some control over the price of its product. To sell additional units it must lower the price, so average revenue (AR) falls as output increases and the AR curve is downward sloping.

(Q5) Define revenue. State the relation between marginal revenue and average revenue.

Ans: Revenue in economics refers to the market value of output produced or receipts from sale of output produced.

Relation between MR and AR:

• If MR > AR, then AR rises as output increases.
• If MR = AR, then AR is constant as output increases.
• If MR < AR, then AR falls as output increases.

CBSE 2016

(Q1) A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will

(a) Greater than Average Revenue

(b) Less than Average Revenue

(c) Equal to Average Revenue

(d) Zero

Ans: (c)

Explanation: If a firm can sell any quantity at the given price (perfect competition), each extra unit adds the same amount to total revenue equal to the market price. Hence marginal revenue (MR) equals average revenue (AR) and both equal price.

(Q2) Suppose total revenue is rising at a constant rate as more and more units of a commodity are sold, marginal revenue would be : (choose the correct alternative) (1)

(a) Greater than average revenue

(b) Equal to average revenue

(c) Less than average revenue

(d) Rising

Ans: (b)

Explanation: When total revenue (TR) increases at a constant rate with each additional unit sold, the extra revenue added by each unit-i.e. marginal revenue (MR)-is constant. This constant MR equals the slope of TR and therefore equals average revenue (AR) in this situation.

(Q3) A firm is able to sell more quantity of a good only by lowering the price. The firm's marginal revenue, as he goes on selling, would be : (choose the correct alternative)

(a) Greater than average revenue

(b) Less than average revenue

(c) Equal to average revenue

(d) Zero

Ans: (b)

Explanation: If a firm can sell additional units only by reducing price, the revenue from the extra unit is less than the current average revenue because the price cut applies to all units sold. Therefore MR < AR.