Marginal revenue is the addition to total revenue from producing one more unit of output
MR = AR at all the output levels
MR will be less than AR at all the output levels
(1) (1) (1)
5 40 100 ∠p x
P = 200
P = –1
New P = P+
Only one producer
No freedom of entry
Large number of sellers and buyers
Firms produce diiferentiated products.
Freedom of entry and exit to firms
Perfect knowledge about market
(any two) 1x2
OR Perfect competition : (1) Large number of sellers and buyers
Firms produce homegeneous product
Freedom of entry and exit to firm
Perfect knowledge about market and technology.
Increase in supply means more quantity supplied at the given price. Supply curve shifts to the right from S1 to S2. This creates excess supply (=E, A) at price OP. Since the firms are not able to sell what they produce, Competition among firms leading to fall in price. takes place. Fall in price leads to rise in demand and fall in supply. These changes continue till price falls to OP2 OP2 is the new equilibrium price and OQ2. equilibrum quantity.
For Blind Candidates in lieu of Question No. 13 Schedule Explanation