Advertisements
Advertisements
Questions
Define Average Revenue. Show that Average Revenue and Price are same.
Why is Average Revenue always equal to price?
Solution 1
Average revenue is the revenue earned per unit of output sold in the market. It is identical to the price of the output produced.
AR = `"TR"/Q`
where
TR = total revenue
AR = `(P xx Q)/Q`
AR = P
Thus, AR is always equal to the price of the output
Solution 2
Average revenue of a firm is the total revenue per unit of output sold
AR = `"TR"/q` ......(1)
TR = `p xx q` .....(2)
By relating Equations 1 and 2,
AR = `(p xx q)/q = p`
When AR equals the market price, the firm can sell any amount of good at a given price
APPEARS IN
RELATED QUESTIONS
Suppose total revenue is rising at a constant rate as more units of a commodity are sold, marginal revenue would be:
(a) Greater than average revenue
(b) Equal to average revenue
(c) Less than average revenue
(d) Rising
What is meant by revenue in microeconomics?
State the relation between marginal revenue and average revenue.
What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?
A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be : (Choose the correct alternative):
(a) Greater than Average Revenue
(b) Less than Average Revenue
(c) Equal to Average Revenue
(d) Zero
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
Marginal revenue of a firm is constant throughout under : (choose the correct alternative)
a. Perfect competition
b. Monopolistic competition
c. Oligopoly
d. All the above
Define marginal revenue.
From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also, find profit at this output
| Output (units) | Total Revenue (Rs) |
Total Cost (Rs) |
| 1 | 6 | 7 |
| 2 | 12 | 13 |
| 3 | 18 | 17 |
| 4 | 24 | 23 |
| 5 | 30 | 31 |
Answer the following question.
Name the market where average revenue is equal to marginal revenue. Give a reason for your answer.
Choose the correct answer from given options
The Total Revenue earned by selling 20 units is ₹ 700. Marginal Revenue earned by selling the 21st unit is ₹ 70. The value of Total Revenue earned by selling total 21 units will be ______________.
Fill in the blank.
Under imperfect competition, Average Revenue (AR) remains ___________ Marginal Revenue (MR).
Explain whether the statement is true or false with reasons.
Under all market conditions, Average revenue and marginal revenue are equal to each other.
Assertion: A firm is able to sell more quantity of a commodity by reducing its price.
Reason: As it sells additional units of the commodity at a lower price, the firm’s marginal revenue will be less than its average revenue.
