Equation 9.1 TR=P×Q The relationship between market price and the firm’s total revenue curve is a crucial one Panel (a) of Figure 9.4 "Total Revenue, Marginal Revenue, and Average Revenue" shows total revenue curves for a radish grower at three possible market prices: $0.20, $0.40, and $0.60 per pound Each total revenue curve is a linear, upward-sloping curve At any price, the greater the quantity a perfectly competitive firm sells, the greater its total revenue Notice that the greater the price, the steeper the total revenue curve is Figure 9.4 Total Revenue, Marginal Revenue, and Average Revenue Panel (a) shows different total revenue curves for three possible market prices in perfect competition A total revenue curve is a straight line coming out of the origin The slope of a total revenue curve is MR; it equals the market price (P) and AR in perfect competition Marginal revenue and average revenue are thus a single horizontal Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 476