Econometrics And Econometricians December 01, 2021

Revenue curves under Different markets

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Broadly markets are of three types as follows: 1. Perfectly competitive market 2.Monopoly market 3.Monopolistic competitive market 1.Revenue curve under perfectly competitive market or Perfect competition: Under perfect competition, a firm is a price taker. It cannot influence /change the market price. AR and MR curve 2. Revenue Curve Under Monopoly: A monopolist is a price maker. He is the single seller of the product in the market. Under monopoly, however, if a firm desires to sell more , he has to reduce price of the product. Thus, there is  negative relationship  between price of the product na ddemand for the product in a monopoly market. Accordingly, a Firm’s AR curve (or the demand curve or the priice line) slopes downaward.  3. Revenue Curve Under Monopolistic Competition: In a Monopolistic Competitive market, producers sell “differentiated product” which means products whose close substitutes are easily available in the market. Under Monopolistic Compet...
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Slope of Demand Curve

 Demand Curve and Its Slope

Demand curve is a graphic presentation of demand schedule showing how quantity demanded of a commodity is related to its own price.

Like demand Schedule, concept of demand curve includes the following two types:

1. Individual Demand Curve: Individual Demand Curve is a curve showing different quantitates of a commodity that one particular buyer is ready to buy at different possible prices of a commodity at a point of time.

2. Market Demand Curve: Market Demand Curve is the horizontal summation of the individual demand curves. It shows the various quantities of a commodity that all the buyers in the market are ready to buy at different possible prices of the commodity at a point of time.


Slope of the Demand Curve

Demand curve normally slopes downward, indicating negative (or inverse) relationship between price of a commodity and its quantity demanded.

Slope of the demand curve is estimated as:(-) Change in Price/ Change in Quantity  . It shows the relationship between change in price corresponding to change in quantity demanded of a commodity. 

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Revenue curves under Different markets

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Broadly markets are of three types as follows: 1. Perfectly competitive market 2.Monopoly market 3.Monopolistic competitive market 1.Revenue curve under perfectly competitive market or Perfect competition: Under perfect competition, a firm is a price taker. It cannot influence /change the market price. AR and MR curve 2. Revenue Curve Under Monopoly: A monopolist is a price maker. He is the single seller of the product in the market. Under monopoly, however, if a firm desires to sell more , he has to reduce price of the product. Thus, there is  negative relationship  between price of the product na ddemand for the product in a monopoly market. Accordingly, a Firm’s AR curve (or the demand curve or the priice line) slopes downaward.  3. Revenue Curve Under Monopolistic Competition: In a Monopolistic Competitive market, producers sell “differentiated product” which means products whose close substitutes are easily available in the market. Under Monopolistic Compet...
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