revenue

• What does total revenue equal in terms of price and quantity?

  $P \times Q$
• Average revenue is equal to total revenue divided by quantity
• Average revenue is always equal to price.
• What does marginal revenue measure?

  Extra revenue from selling more output
• Marginal revenue is the change in total revenue divided by the change in quantity
• Characteristics of a perfectly competitive market

  1️⃣ Infinite buyers and sellers

  2️⃣ Homogeneous goods

  3️⃣ Firms are price takers

  4️⃣ No barriers to entry or exit

  5️⃣ Perfect information
• In a perfectly competitive market, firms can set their own prices.

  False
• What does the average revenue curve look like in perfect competition?

  Horizontal
• In perfect competition, average revenue is equal to both price and marginal revenue.
• What is the shape of the total revenue curve in perfect competition?

  Linear upward sloping
• In perfect competition, total revenue increases at a constant rate.
• Characteristics of imperfect competition

  1️⃣ Few buyers and sellers

  2️⃣ Differentiated goods

  3️⃣ Firms are price makers

  4️⃣ High barriers to entry and exit

  5️⃣ Imperfect information
• What is the key difference between firms in perfect and imperfect competition?

  Price-taking vs price-making
• In imperfect competition, firms are governed by the law of demand.
• In imperfect competition, higher prices lead to lower quantity sold.
• What does the marginal revenue curve look like in imperfect competition?

  Downward sloping
• In imperfect competition, marginal revenue is twice as steep as average revenue.
• Marginal revenue can become negative in imperfect competition.
• At what point is total revenue maximized in imperfect competition?

  When marginal revenue is zero
• Total revenue in imperfect competition starts to decrease when marginal revenue becomes negative.
• Total revenue increases when marginal revenue is positive.
• What is the mathematical form of a linear demand curve?

  $P =$$a - bQ$