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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Short Run Costs- Explained

Short Run is period of time during which some factors are fixed and some are variable. Accordingly, Short Run Costs have the following two components:

(i) Fixed Costs that refers to expenditure on fixed factors of production

(ii) Variable Costs which refers to expenditure on variable factors.

Therefore,

 Total Cost (TC) = Total Fixed Cost (TFC) +Total Variable Cost (TVC)


I. Fixed Costs

Fixed costs are the costs related to the use of fixed factors of production. They are also called Supplementary costs or Overhead costs or Indirect costs. These costs do not change with the change in output. These are constant costs. These are incurred even when output is Zero.

Principal Components of Fixed costs are: 

(i) Expenditure on machine and plants

(ii) Expenditure on land and building

(iii) License fee

(iv) Wages and Salaries of permanent staff


Total Fixed Costs Curve





II. Variable Costs

Variable costs are those costs which are related to the use of variable factors. Variable costs refer to the expenditure incurred by the producer on the use of variable factors of productions.

Principal components of variable costs are:

(i) Costs of raw material

(ii) Wages of casual workers

(iii) Expenses on electricity

(iv) Wear and tear expenses 


Total Variable Cost Curve







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Revenue curves under Different markets

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