Page 227 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Microeconomic Theory Hitesh Jhanji, Lovely Professional University

Notes
Unit-11: Concepts of Revenue

CONTENTS
Objectives

Introduction

11.1 What is Revenue?
11.2 Concepts of Revenue Under Different Market Conditions

11.3 Concepts of Revenue Under Perfect Competitions
11.4 Concepts of Revenue Under Monopoly and Monopolistic Competitions

11.5 Rectangular Hyperbola AR Curve Under Monopoly

11.6 Graphical or Geometrical Relation between Total Average and Marginal Revenues
11.7 Mutual Determination of Elasticity of Demand, Average and Marginal Revenue

11.8 Total Revenue and Elasticity of Demand
11.9 Summary

11.10 Keywords
11.11 Review Questions

11.12 Further Readings

Objectives

After studying this unit, students will be able to:
• Know Revenue.
• Understand the Concepts of Revenue Under Different Market Conditions.
• Explain Mutual Determination of Elasticity of Demand, Average and Marginal Revenue.
• Know Rectangular Hyperbola AR curve under Monopoly.

Introduction

In monopoly condition, average revenue curve and marginal revenue curve are the downwards
lines. It means that in various points of average revenue curves, the demand of elasticity is different.
The relation between average revenue and marginal revenue can be known by demand of elasticity.
It must be understood that average revenue of a firm is actually its demand curve. By this firm
knows that the price of product will change in which direction.

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