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Different Types of Revenue Curves
Different Types of Revenue Curves
Units Price TR AR MR
1 10 10 10 10
2 9 18 9 8
3 8 24 8 6
4 7 28 7 4
5 6 30 6 2
6 5 30 5 0
7 4 28 4 -2
Relation between AR and MR under perfect
competition
Firms are price takers
only. AR and price
becomes same. MR
coincides with AR because
additional units are sold
at same price.
=P
Relation between AR and MR under perfect
competition
Firms are price takers
only. AR and price
becomes same. MR
coincides with AR because
additional units are sold
at same price.
=P
Relation between AR and MR under
imperfect market
• Both AR and MR declines with increase in the units of sales
• MR lies below the AR because the additional sales earn less
than average revenue.
1) When both AR and MR curves are straight line