The curve that shows the change in total cost that accompanies a change in quantity produced and sold is called the marginal revenue curve.
What is marginal revenue curve?
- The same variables that drive the demand curve also affect the marginal revenue curve: changes in income, changes in the costs of alternatives and complements, changes in population, etc.
- The marginal revenue curve may spin and shift as a result of these causes. Under perfect and imperfect competition, the marginal revenue curve is different (monopoly).
- There are many companies in the market when there is perfect competition. Changes in a single company's supply level have no effect on the market's average pricing.
- Companies are price takers who adhere to the price set by the equilibrium of supply and demand in the market.
- At the market price, the marginal revenue curve is horizontal, indicating totally elastic demand, and it is equal to the demand curve.
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