The following points highlight the four key benefits of AR and MR curves. The key benefits are: 1. Profit Determination 2. Determination of Full Capacity 3. Equilibrium Determination 4. Factor-Pricing Determination. Key Benefit # 1. Profit Determination: The AR curve is the price line for the producer in all market situations. By relating the AR curve to the AC curve [...]
Learn about the relationship between AR and MR Curves. The relation between average revenue and marginal revenue can be discussed under pure competition, monopoly or monopolistic competition or imperfect competition. (1) Under Pure Competition: The average revenue curve is a horizontal straight line parallel to the X-axis and the marginal revenue curve coincides with it. This is because under pure [...]
The below mentioned article provides an overview on Baumol’s Sales or Revenue Maximisation. Prof. Baumol in his book Business Behaviour, Value and Growth (1967) has presented a managerial theory of the firm based on sales maximisation. He discusses two models of sales maximisation: a static model and a dynamic model. We shall analyse only his static model of sales maximisation [...]