Does total revenue increase at a constant rate or not?
2006-12-04 06:36:48 · 2 answers · asked by James 1 in Social Science ➔ Economics
No - revenues are subject to sales - which are in turn subject to pretty much everything....sales can jump one quarter and dive the next.
If sales aren't constant so revenues won't be constant.
2006-12-04 08:18:31 · answer #1 · answered by G_Elisabeth 5 · 0⤊ 0⤋
In a perfectly competitive market when the company is a price-taker, yes.
In all other cases, it does not. The increase in total revenue is equal to MR, which is the first derivative of the revenue function. Since revenue= Price*quantity, the derivative with respect can be constant only if the quantity produced by the firm and price are not related (i.e. if the firm is a price taker= individual demand that the firm faces is infinitely elastic).
2006-12-05 03:58:03 · answer #2 · answered by jimbell 6 · 0⤊ 0⤋