Unformatted text preview: Average revenue: Total revenue divided by the number of units sold. AR= TR/Q
Marginal revenue: Change in total revenue from selling one more unit.
Marginal revenue= change in total revenue/ change in quantity. For a ﬁrm in a perfectly competitive market, price is equal to both average revenue and marginal
revenue. - Determining the proﬁt maximizing level of output: A. The proﬁt maximizing level of output is where the difference between total revenue and
total cost is the greatest. B. The proﬁt maximizing level of output is also where marginal revenue equals marginal
cost, MR=MC. For a ﬁrm in a perfectly competitive industry, price is equal to marginal revenue, or P=MR. So,
we can restate the MR=MC condition as P=MC. ...
View Full Document
- Spring '11