# Average revenue curve. Average Revenue Curve is also known as _________.a)Profit Curveb)Demand Curve.c)Supply Curved)Average Cost CurveCorrect answer is option 'B'. Can you explain this answer? 2022-10-27

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An average revenue curve represents the relationship between the average price of a good or service and the quantity of that good or service sold. The average revenue is calculated by dividing the total revenue by the quantity of goods or services sold.

In perfect competition, the average revenue curve is a horizontal line at the market price because each firm is a price taker and has no control over the price of the product. In this type of market, firms can sell as much as they want at the market price and their total revenue will depend on the quantity sold.

On the other hand, in monopolistic competition, firms have some control over the price of their product because they have some degree of market power. In this type of market, the average revenue curve slopes downward because as the firm increases the quantity of goods or services sold, it must lower the price to sell more. This is due to the law of diminishing marginal returns, which states that as the quantity of a good or service increases, the marginal revenue (the additional revenue gained from selling one more unit) decreases.

In a monopoly, the firm is the sole producer of the good or service and has complete control over the price. In this case, the average revenue curve is the demand curve for the good or service because the firm can choose the price at which to sell each unit. The demand curve slopes downward because as the price increases, the quantity demanded decreases due to the law of demand.

It is important to note that the average revenue curve is different from the marginal revenue curve, which represents the change in total revenue from selling one more unit of a good or service. The marginal revenue curve is always below the average revenue curve because as the quantity of a good or service increases, the average price per unit decreases due to the law of diminishing marginal returns.

In conclusion, the average revenue curve represents the relationship between the average price of a good or service and the quantity sold and is important in understanding the pricing behavior of firms in different market structures. In perfect competition, the average revenue curve is a horizontal line at the market price, in monopolistic competition it slopes downward, and in a monopoly it is the demand curve for the good or service.

## Revenue Curves Also, if the AR curve slopes downward, the MR curve also slopes downward, and faster than the AR curve. . How does the total revenue test show elasticity? Collect your data Gather a set of data over a predetermined amount of time. AR, MR and Elasticity : However, the true relationship between the AR curve and its corresponding MR curve under monopoly or imperfect competition depends upon the elasticity of the AR curve. You can compute the price by substituting the weekly production into the average revenue function as follows: The weekly price is 90 cents. .

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## Average Revenue Curve is also known as _________.a)Profit Curveb)Demand Curve.c)Supply Curved)Average Cost CurveCorrect answer is option 'B'. Can you explain this answer? The Dummies website explains it as the difference between total revenue and total cost. In order to track the amount of the revenue which is generated per mobile phone user of that particular sector over a period of time. You can compute the new weekly price as follows: The new weekly price is 83 cents. This can be adjusted based on the business model. Total revenue increases but at a constant rate.

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## Average Revenue Formula . Revenue per unit can be calculated by dividing total revenue by total units sold. If it increases its price to Rs. On the other hand, if the market cost price is at the lower degree p 1 , then customers are ready to purchase a higher quantity q 1. Cable companies like Comcast also disclose the ARPU figures. The total revenue in this case is Rs. If the marginal cost of production is below the average total cost for producing previous units, as it is for the points to the left of where MC crosses ATC, then producing one more additional unit will reduce average costs overall—and the ATC curve will be downward-sloping in this zone.

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## Q4. A firm faces the following avera... [FREE SOLUTION] Total cost is the total amount incurred by a firm on the factors of production. Total revenue is the total sales proceeds of a firm by selling a commodity at a given price. What is a revenue curve? In other words, the AR curve or the demand curve faced by a competitive firm becomes perfectly elastic. . Answer: In a monopoly, the marginal and average revenue curves are NOT identical.

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## Why is average revenue curve downward sloping? [Solved] (2023) This is an important contrast with perfect competition. Under monopoly both AR and MR curves slope downward. The average total cost curve is typically U-shaped. Cost Curves at the Clip Joint. Thus, the profit and price remain the same, indicating that the impact on market conditions remains the same irrespective of who pays the tax. The same is also expressed by stating that cost price is a decreasing function of the amount sold. The breakdown of total costs into fixed and variable costs can provide a basis for other insights as well.

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## Revenue Curves under Different Markets (With Diagram) It implies that TR of the monopolist will remain same whatever may be the price. Why is P AR in perfect competition? Can you explain this answer? Furthermore, in this type of market, there are a large number of sellers having products with some differentiation to create a monopoly in the market. In oligopoly, however, AR curve cannot be drawn with definiteness but the practice is to draw downward sloping AR and MR curves. TR increases at a diminishing rate, becomes maximum at point N and then begins to decline. It shows MR to be negative. Total revenue is the full amount of total sales of goods and services.

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## Market Demand Curve is the Average Revenue Curve Marginal cost can be calculated by taking the change in total cost and dividing it by the change in quantity. Because it stays constant across other varying output levels, the price of a competitive firm equals both its marginal revenue and average revenue. The average revenue curve reflects the degree of market control which is controlled by the firm. Under perfect competition, average revenue curve is a straight horizontal line and is equal to MR. It is because additional units are sold at the same price as before. Moreover, average revenue is also equal to the price of Amblathan-Plus for each quantity sold.

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## Monopolist's Revenue Curve: Concept and Explanation with Examples If the market cost price is at p 0 , then customers are ready to buy the quantity q 0. . In this case, as shown in Fig. . At price OP, the seller can sell any amount of the commodity. Divide by the number of data points For this example, there are four data points, one for each unit. Total revenue TR is calculated by multiplying price P per unit and quantity Q of the good sold.

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## Relation between Average Revenue and Marginal Revenue Curves under Different Market Conditions Calculate Average Revenue AR and Marginal Revenue MR : FAQ What is average revenue and its formula? What does P times Q mean? In economics, the demand curve is the graphic representation of the relationship which is present between the quantity of product that is demanded and the product price. For the monopoly enterprise, the above argument depicts itself from the contrary direction. The marginal cost curve may fall for the first few units of output but after that are generally upward-sloping, because diminishing marginal returns implies that additional units are more costly to produce. Total revenue is the total receipts a seller can obtain from selling goods or services to buyers. The average revenue can be defined as a measurement of revenue that is generated per unit. If the government decides to levy a tax of 14 cents per unit on this product, what will be the new level of production, price, and profit? In table 5 we find that as output increases, AR remains the same i.

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