Why average revenue curve is called demand curve?

Average revenue curve is often called the demand curve due to its representation of the product’s demand in the market. Each point on the curve represents the price of the product in the market. Price determines the demand for a product, hence Average revenue curve is also demand curve.

Hereof, why the average revenue curve is demand curve in the monopoly?

Because average revenue is essentially the price of a good, the average revenue curve is also the demand curve for a monopoly’s output. If a monopoly wants to sell a larger quantity, then it must lower the price. The average revenue curve reflects the degree of market control held by a firm.

Also Know, is the demand curve the same as the marginal revenue curve? Marginal revenue is less than price. Marginal revenue — the change in total revenue — is below the demand curve. Thus, for a linear demand curve, the marginal revenue curve starts at the same intercept as the demand curve, but its slope is twice as steep.

Besides, what is average revenue curve?

An average revenue curve is the relation between the average revenue a firm receives from production and the quantity of output produced. The average revenue curve reflects the degree of market control held by a firm.

Why is the average revenue function horizontal?

The average revenue curve is a horizontal straight line parallel to the X-axis and the marginal revenue curve coincides with it. This is because under pure (or perfect) competition the number of firms selling an identical product is very large.

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