Revenue Flashcards
What is Revenue
money received from selling your products
What is Total Revenue
Price x quantity sold
What is Average Revenue
Total Rev/ Quantity
equal to price
What is Marginal Revenue
Revenue from the sale of an additional unit
What are features of perfect competition
Lots of firms in market
Price takers
Small concentration ratio
Consumers have near to perfect info
Lower prices
What are features of Imperfect Competition
Monopolies
Price Makers
Few firms in the market
Unique goods sold
Higher prices as less substitutes
Consumers lack info
What does demand equal
Average Revenue which equals Price
How do you workout marginal revenue
change in TR/ change in Q
Features of imperfect competition diagram
MR goes off X axis due to negative values
when MR=0 Its optimum Total Rev
Demand= AR=P
MR is in centre of x axis
TR Is N shaped with peak on MR=0
When MR is positive TR increases
When MR is negative TR Decreases
What is Features of Perfect Competition Diagram
MR is horizontal line which =AR=D=P
MR is Constant
Total Revenue is constantly increasing throughout
Price is set by market which causes this
How does Elasticity work on Imperfect graph
Elastic on top = Positive MR
MR=0 unit elastic
Negative MR=Inelastic
all due to being more responsive when prices are high
When MR is positive/negative what happens to Total revenue
positive: TR increases
negative: TR decreases
