Question

How is Total Revenue under perfect competition different from Total Revenue under imperfect competition? Give two points to show the difference.

Answer 1

Difference between Total Revenue under perfect competition and total revenue under imperfect competition are as follows:

Basis of Difference	Perfect Competition	Imperfect competition
Dependence on Output Level	Total Revenue (TR) is precisely proportional to the quantity sold under perfect competition because the price is constant. As a result, TR increases linearly in proportion to output.	Due to the downward sloping demand curve under imperfect competition, Total Revenue (TR) is not directly proportionate to output. Firms have some pricing power and TR may rise at a slower rate, remain constant or even decrease when output increases, depending on the price elasticity of demand.
Impact of Price Changes	In perfect competition, a firm cannot influence price; hence, changes in total revenue are exclusively the result of changes in the quantity of goods sold.	Firms in imperfect competition can affect their product pricing through non-price competitive techniques such as marketing and product differentiation. Changes in price can have a direct impact on the firm's total revenue, both in terms of quantity sold and price per unit. The elasticity of the product demand determines the effect of a price change on overall revenue.
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