Advertisements
Advertisements
प्रश्न
What would be the shape of the AR curve if total revenue does not change with increase in sale, i.e., TR curve is a horizontal?
दीर्घउत्तर
Advertisements
उत्तर
If the Total Revenue (TR) does not change with an increase in sales — meaning the TR curve is horizontal — it implies that the firm is not earning any additional revenue from selling more units of output. In such a case, the Average Revenue (AR), which is calculated as:
`AR = (TR)/Q` will continuously fall as output (Q) increases, because the numerator (TR) remains constant while the denominator (Q) increases.
Therefore, the shape of the AR curve will be a downward-sloping curve approaching the X-axis (but never touching it), indicating that average revenue per unit is falling as more units are sold.
shaalaa.com
या प्रश्नात किंवा उत्तरात काही त्रुटी आहे का?
