Under monopolistic competition, the relationship between AR and MR is the same as under monopoly. But there is an exception that the AR curve is more elastic. This is because products are close substitutes under monopolistic competition. The firm can increase its sales by a reduction in its price.
In this video, we discuss the theory of revenue under monopoly and monopolistic competition.
We explore total revenue (TR), average revenue (AR), and marginal revenue (MR) curves and how they are affected by market structure.
Finally, we provide real-world examples to help illustrate these concepts.
We'll be discussing the theory of revenue under monopoly and monopolistic competition. We'll start by defining each market structure and then move on to exploring total revenue, average revenue, and marginal revenue. We'll see how these concepts are different in a monopolistic competitive market as opposed to a monopoly market, and how firms can maximize their profits in each type of market.
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