Tiêu đề Unit 2 Market & Revenue Curves ✅

Market and Revenue Curves Market: In economics, the term 'market' does not only refer to a particular place but refer to the whole set of condition under which a commodity is bought and sold i.e. trade. Market needs the existence of both buyer and seller of a commodity who make present in a small of a commodity that make present in a small locality, or may spread over a region, a country or the entire world. According to N.G. Mankiw," A market is a group of buyers and sellers of a particular commodity or service. The buyers as a group determine the demand for the product, and sellers as a group determine the supply of the product." Classification of Market: 1. Prefect Competition 2. Imperfect Competition Perfect Competition Market: Perfect Competition is that market structure in which there are large number of buyers and sellers selling a homogenous product at uniform price. In this market, both the buyer and seller are price taker but not a price maker. In this perfectly competitive market, the seller can sell any amount of the commodity at the ruling or existing price. In other words, the seller does not have to reduce price of product in order to increase the sales. Features of Perfect Competition Market: 1. Large Number of Buyers and Sellers 2. Homogenous Products 3. Free Entry and Exit 4. Perfectly Mobility of Factors of Production 5. Rational Buyers and Seller 6. Uniform Price 7. Profit Maximization Monopoly Market: The term monopoly has been derived from the Greek Word 'mono' and 'poly'. Mono refers to single and poly means seller. Thus, monopoly refers to a market structure where there is a single seller of the product having no close substitute. The monopolist can determine both prices as well as output but not simultaneously. Nepal Electricity Authority, Nepal Oil Corporation are examples of monopoly market. © DOWNLOADED VIA: NOTE LIBRARY APP © Shailesh shrestha
Features of Monopoly Market: 1. Single seller and large number of buyers. 2. Absence of close substitute. 3. Barrier to entry of new firm. 4. Full Control over price 5. Price Discrimination 6. Profit Maximization Reason for monopoly: Most monopolists have some form of government regulation or protection or have patent on particular goods or on production process. Monopoly arises due to following reasons: 1. When a firm may gain patent right to produce a commodity or a production technology, it will be a monopoly firm. 2. When a firm may own or control the entire supply of a raw material required to produce a commodity, it will acquire monopoly power. 3. When a firm can produce a product in a very lower cost as compared to other firms, it will gain the monopoly power. This type of monopoly is called natural monopoly. 4. When a firm gets some form of government regulation and protection, it will be monopoly firm. For example: government often provides license of franchise for goods of utility. Types of monopoly: 1. Simple Monopoly and Discriminating Monopoly A simple monopoly firm charges uniform price for its output while discriminating monopoly charges different prices for the some product to different buyers.\ 2. Pure Monopoly and Imperfect Monopoly Pure monopoly firm has absolute monopoly power since it has complete control over the supply of its products. This is possible when there is no close substitute of the product produced by the monopolist. 3. Natural Monopoly Natural Monopoly arises due to economies of scale. If a firm can produce a commodity at very low cost of production, other firm cannot enter into the market. As a result, natural monopoly is established in market. 4. Legal Monopoly If a firm acquires monopoly power due to legal provision in the country it is called legal monopoly. Such monopoly is protected by government and legal provisions of patent right, trademarks, copyright, etc.\ © DOWNLOADED VIA: NOTE LIBRARY APP © Shailesh shrestha

Revenue: Revenue means sales receipt. It is the receipt obtained by a firm selling various quantity of its product. It has three main concepts: i. Total Revenue (TR) ii. Average Revenue (AR) iii. Marginal Revenue (MR) Total Revenue (TR) : It is the total sales receipt of the output produced over a given period of time. TR=Price (P) x Quantity (Q) Average Revenue (AR): It refers to revenue per unit of output sold. AR=Total Revenue (TR) Quantity (Q) Marginal Revenue (MR) : It is the additional revenue made to the total revenue when one more unit of output is sold. MR= ∆ in TR ∆ in Q ASSIGNMENTS:  If a seller sells 10 piece of pen at price Rs.100 then find total revenue.  If the total revenue received from the sale of 15 books is Rs.6000, find average revenue.  If total revenue received from sale of 5 and 6 of books are Rs.2000 and Rs.4000 respectively, then find marginal revenue.  If total revenue received from sale of 10 units and 11 units of a commodity are Rs.1000 and Rs.1500 respectively, find marginal revenue.  If total revenue received by a firm from the sale of 5 and 10 pieces of pencil are Rs.50 and Rs.100 respectively, find marginal revenue.  If the total revenue function TR=12Q-3Q2, find AR and MR functions. © DOWNLOADED VIA: NOTE LIBRARY APP © Shailesh shrestha