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Harry Bindloss




REVENUES
Objectives of firms

All firms want to profit maximise

PROFIT = TR ­ TC

Economists have 2 different profits

1. Normal profit: The entrepreneur receives the minimum amount of profit to keep
him/her in business. If there is less he/she will change industries or place resources into…

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Harry Bindloss




Price Taker




Total Revenue = Quantity sold x price

Average Revenue = Total revenue/Quantity

Marginal Revenue = Revenue generated by each extra unit



Revenue for the Price taker

All firms in that particular market cannot set a price and they are all at the same level so
there…

Page 3

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Harry Bindloss




Revenue for Price Makers

Price Maker ­ Firms can influence the market. Could be due to a sole supplier or a unique
product. Therefore this firm has an influence over the price. It will have a downwards sloping
demand curve.

The MR curve and AR curve will be…

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