4.1.4.6 Marginal, average and total revenue NOTES

What does Marginal Revenue (MR) represent?

• The total value of sales made by the firm

• The revenue generated per unit of output sold

• The change in total revenue resulting from the sale of one additional unit

• The overall revenue earned from selling a certain quantity of output

How is Average Revenue (AR) calculated?

• By dividing the change in total revenue by the change in quantity sold

• By multiplying the price per unit by the quantity of output sold

• By dividing total revenue by the quantity of output sold

• By adding the total revenue to the marginal revenue

In a perfectly competitive market, what is the Average Revenue (AR) equal to?

• Marginal Revenue

• Total Revenue

• Quantity of Output Sold

• Market Price

Why is the Average Revenue Curve considered the firm's Demand Curve in perfect competition?

• Because it is calculated by multiplying price per unit by quantity sold

• Because it is perfectly elastic

• Because it represents the total revenue per unit

• Because it is equal to the market price

What happens to Marginal Revenue when demand is elastic?

• It remains constant

• It is less than average revenue

• It is greater than average revenue

• It becomes zero

What is the relationship between Marginal Revenue and Total Revenue when demand is unit elastic?

• Marginal revenue is negative

• Marginal revenue is positive and increasing

• Marginal revenue is zero

• Marginal revenue is constant

What indicates a decrease in Total Revenue in terms of Marginal Revenue?

• When marginal revenue is positive

• When marginal revenue is constant

• When marginal revenue is zero

• When marginal revenue is negative

In monopolistic markets, how does Marginal Revenue behave compared to Average Revenue when demand is inelastic?

• Marginal revenue is greater than average revenue

• Marginal revenue is zero

• Marginal revenue is less than average revenue

• Marginal revenue is equal to average revenue

How does the Average Revenue Curve behave in a monopolistic competition market?

• It is perfectly elastic

• It slopes downward

• It remains constant

• It is perfectly inelastic

What effect does an increase in market price have on the Marginal Revenue in a perfectly competitive market?

• Marginal revenue increases

• Marginal revenue decreases

• Marginal revenue remains unchanged

• Marginal revenue becomes negative