revenue concept
TRANSCRIPT
![Page 1: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/1.jpg)
REVENUE
CONCEPT
![Page 2: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/2.jpg)
General concept of total revenue, average revenue and marginal revenue.
Derivation of TR, AR and MR under perfect competitive and monopoly market structure.
Relationship between TR, AR and MR.
WHAT WE LEARN IN THIS CHAPTER ?
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A. Total Revenue (TR):
Formula:
![Page 4: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/4.jpg)
B. Average Revenue (AR):
Formula:
![Page 5: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/5.jpg)
C. Marginal Revenue (MR):
Formula:
![Page 6: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/6.jpg)
ILLUSTRATIONQTY 1 2 3 4 5 6 7 8
PRICE 12 11 10 9 8 7 6 5
Output Price TR AR MR
1 12 12 12 -
2 11 22 11 10
3 10 30 3 8
4 9 36 9 6
5 8 40 8 4
6 7 42 7 2
7 6 42 6 0
8 5 40 5 -2
SOLUTION
![Page 7: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/7.jpg)
Total Revenue Under Perfect Competition
Units of Output (Q)
Per Unit Price (P) Total Revenue (TR)
0 10 0
1 10 10
2 10 20
3 10 30
4 10 40
5 10 50
![Page 8: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/8.jpg)
TR
OutputO64 5321
40
TR
20
30
50
10
![Page 9: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/9.jpg)
AVERAGE REVENUE UNDER PERFECT COMPETITION
Units of Output (Q)
Per Unit Price (P)
Total Revenue (TR)
Average Revenue (AR) = TR/Q
0 10 0 -
1 10 10 10
2 10 20 10
3 10 30 10
4 10 40 10
5 10 50 10
![Page 10: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/10.jpg)
• Graphically,AR
OutputO64 5321
40
20
30
50
10 AR
![Page 11: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/11.jpg)
Units of Output (Q)
Per Unit Price (P)
Total Revenue
(TR) = P × Q
Average Revenue
(AR) = TR/Q
Marginal Revenue(MR) = ΔTR/ΔQ
0 10 0 - -
1 10 10 10 10
2 10 20 10 10
3 10 30 10 10
4 10 40 10 10
5 10 50 10 10
Marginal Revenue in Perfect Competition
![Page 12: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/12.jpg)
MR
OutputO64 5321
40
20
30
50
10 MR
Graphically,
![Page 13: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/13.jpg)
Monopoly Market
![Page 14: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/14.jpg)
AR, TR & MR Under Monopoly
![Page 15: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/15.jpg)
RELATIONSHIP BETWEEN AR AND MR CURVES & PRICE ELASTICITY
![Page 16: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/16.jpg)
Quantity
Q
AR
=AR curve
MR curve
![Page 17: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/17.jpg)
What we covered
![Page 18: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/18.jpg)
Conclusion !
![Page 19: Revenue concept](https://reader035.vdocuments.site/reader035/viewer/2022070512/589eea941a28abe97f8b57bd/html5/thumbnails/19.jpg)
THANK YOU !