## TR, AR and MR curves under perfect competition and imperfect competition

In economics, the Total Revenue (TR), Average Revenue (AR) and Marginal Revenue (MR) curves are used to illustrate the revenue that a firm can generate under perfect competition and imperfect competition. In the case of perfect competition, the TR, AR and MR curves are all the same. This is because each firm in a perfectly competitive market is a price-taker, meaning that the price is determined by the market and the firm has no influence on it. The curves under perfect competition can be seen in the table above. As the quantity of the good sold increases, the total revenue increases at the same rate. On the other hand, under imperfect competition, the TR, AR and MR curves are not the same. The AR curve is below the TR curve, and the MR curve is below the AR curve. This is because firms in an imperfectly competitive market have some influence on the price, and thus the TR increases at a faster rate than the AR, and the AR increases at a faster rate than the MR.

## Supporting Subsections

### Total Revenue (TR) Curve Under Perfect Competition

The Total Revenue (TR) curve under perfect competition is a straight line, as can be seen in the table above. This is because each firm in a perfectly competitive market is a price-taker, meaning that the price is determined by the market and the firm has no influence on it. Therefore, as the quantity of the good sold increases, the total revenue increases at the same rate.

### Average Revenue (AR) Curve Under Perfect Competition

The Average Revenue (AR) curve under perfect competition is also a straight line, as can be seen in the table above. This is because the AR curve is the same as the TR curve, as each firm in a perfectly competitive market is a price-taker. Therefore, as the quantity of the good sold increases, the average revenue increases at the same rate.

### Marginal Revenue (MR) Curve Under Perfect Competition

The Marginal Revenue (MR) curve under perfect competition is also a straight line, as can be seen in the table above. This is because the MR curve is the same as the TR and AR curves, as each firm in a perfectly competitive market is a price-taker. Therefore, as the quantity of the good sold increases, the marginal revenue increases at the same rate.

### Total Revenue (TR), Average Revenue (AR) and Marginal Revenue (MR) Curves Under Imperfect Competition

The TR, AR and MR curves under imperfect competition are not the same. The AR curve is below the TR curve, and the MR curve is below the AR curve. This is because firms in an imperfectly competitive market have some influence on the price, and thus the TR increases at a faster rate than the AR, and the AR increases at a faster rate than the MR.

## Related Questions

• What is the difference between perfect competition and imperfect competition?
• What are the characteristics of perfect competition?
• How does the price mechanism work in perfect competition?
• What is the equilibrium price in perfect competition?
• What is the difference between average revenue and marginal revenue?
• What is the total revenue curve?
• What is the average revenue curve?
• What is the marginal revenue curve?
• How is total revenue affected by changes in price?
• How is marginal revenue affected by changes in quantity?