What is the behaviour of average revenue in a market in which a firm can sell any quantity of a good at a given price?

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...

Average Revenue is defined as the revenue per unit of the output sold. It is expressed as the ratio between total revenue and the output sold. AR = TR/Q We know that, TR...

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.

(c) Equal to Average Revenue.

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

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

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

MR is constant at all levels of output.

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