Question

the MR curve of a firm which can sell more output apt the same price is the same as the​

Answer 1

• When the firm charges same price for any respective good or service,the Average Revenue(AR) will be equal to Marginal Revenue(MR).

• 2) If the firm lowers the price of any good or service as it sells more output,both the AR and MR will decrease as the firm sells more output.

• In Microeconomics and Production Economics,AR is basically calculated as the total revenue obtained by the firm or company from selling a certain quantity or amount of output to the consumers in a given period of time divided by the total number of outputs actually sold by the firm or company.MR basically shows the change in TR for every 1 unit of output sold by any firm or company to the consumers or the additional revenue obtained from selling 1 more unit of the output to the consumers.

• Now,in the first case,if the price remains the same or constant as the firms sell more output,the MR obtained by selling each unit of output will also remain same or fixed and so will the AR as the firm is not able to change the price level and have to accept the same price for every unit of output.Therefore,in this case,the price of each unit of output will be equal to MR as well as AR and hence,AR is equal to MR.

• In the second case,the firm or company lowers the price of each unit of the output and sells more output.Therefore,note that the MR will decrease for each unit of output sold and consequently,it will pull down AR as well.If the each unit output price is reduced as the firm sells more output,then automatically MR will decrease as MR is equal to price and if MR decreases then AR will also decrease as the firm keeps on selling output.