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Question
What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?
Solution
Average revenue (AR) of a firm is the total revenue per unit of output sold. AR = p * q/q = p. When AR equals the market price, the firm can sell any amount of good at a given price. If the firm sells more quantity of output by lowering the price, then the AR curve slopes downwards.
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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
State the relation between marginal revenue and average revenue.
Under which market form a firm's marginal revenue is always equal to 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.
