Revenue Flashcards
What is the equation for total revenue ?
Price X Quantity sold
What is the equation for average revenue ?
Total revenue / quantity sold
What is the equation for marginal revenue ?
Change in total revenue / Change in quantity
What do we assume when there is perfect competition ?
There are many buyers and sellers
Goods are identical / homogenous
Firms are price takers ( do not have price setting power )
No barriers to entry or exit
Perfect information for producers and consumers
Draw the average revenue diagram
Draw the total revenue diagram
What do we assume when there is imperfect competition ?
Few buyers and sellers
Different goods sold
Firms have price making power
High barriers to entry and exit
Imperfect information for producers and consumers
Draw the Average revenue and Marginal revenue diagrams
