- Created by: Natan21
- Created on: 14-07-15 10:09
Average revenue (AR)
Demand and average curves are identical.
Marginal revenue (MR)
Marginal revenue is always twice as steep as average revenue.
mMR/2=mAR ∴ mMR=2(mAR)
Total revenue (TR)
Total revenue always rises and falls overtime (arch)
∵ in order to sell more, price must fall.
relation between MR & TR
As long as marginal revenue is positive,
Total revenue is not decreasing.
AR and elasticities
Every demand (i.e. average revenue) curve goes through 3 stages of elasticity except perfectly elastic (horizontal) or inelastic (vertical) curves.