Total revenue is calculated simply - quantity sold multiplied by the given price.
Average revenue is a revenue per unit.
Marginal revenue is an addition to total revenue from one additional sale - one more passenger, for example.
MR will always be longer than AR because the firm can sell more by reducing the price of all units.
The total revenue curve has an upside-down U-shape, because it indicates how customers react to different prices due to variations in PED. The total revenue is maximised where the PED = 1.
6 comments:
What do you mean, MR will be 'longer'?
Why does MR bissect the horizontal access?
Why does MR slope downwards?
What happens to MR if you offer a discount?
Here is real business:
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AR is downward sloping cuz it's firm's demand! And MR is twice as steep as AR curve so obviously it's sloping downwards as well!
and also, i meant "lower' not longer!
so, now about crossing the axis.
MR crosses the axis at the point where PED = 1, so when it's below the axis, the PED is <1.
If you offer a discount, both AR and MR will slope downwards even more steeply and the quantity where the total revenue is maximised will be less.
AR is downward sloping cuz it's firm's demand! And MR is twice as steep as AR curve ....
WHY?
so, now about crossing the axis.
MR crosses the axis at the point where PED = 1,....
WHY?
so when it's below the axis, the PED is <1.
How is that linked to oligopoly?
hey hey may i answer to ur comments on the weekend?
cuz I have to move on with my hw and all i do now is trying to find the answers!
ask your teacher!
In future when you blog THINK whilst blogging.
yeah ok sure
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