What is the relation between market price and average revenue of a price taking firm?

Total revenue is defined as the total sales proceeds of a producer by selling corresponding level of output. In other words, it is defined as price times the quantity of...

At Price, P1 = Rs 10 Total Revenue, TR1 = P1 x Q1 = 50 = TR1/P1 = Q1 = 50/10 = Q1 = Q1 = 5units At Price, = Rs 15 Total Revenue, TR2 =...

Market price and average revenue of a price taking firm are equal. Both are indicated by a horizontal straight line. Because market price is constant for a price taking firm.

Average revenue continuously decreases in such a market in which a firm can sell more only by lowering the price.

Average revenue is constant at all levels of output in a market in which a firm can sell any quantity of a good at a given price.

For a price taking firm, market price is equal to marginal revenue.

Total revenue is the multiplication of quantity sold and market price, whereas market price is the ratio of total revenue and quantity sold. TR = P X Q P = △TR/△Q

(i) When MR< AR, AR falls. (ii) When MR = AR, AR is constant. (iii) When MR > AR, AR rises.

In such a market whether the firm sells more or less, it does not affect the market price. It makes the average revenue constant as output is increased. According to marginal...

Average revenue continuously falls in the market, in which a firm can sell more only by lowering the price.