Marginal and average revenue?

Question

Is it possible for marginal revenue to be greater than average revenue ? if so how ? plz explain with a numerical example if possible.
if you have any links pertaining to the topic it would be welcome.

Answer 1

By the logic in answer one, only with the first item sold will
MR =AR. After that point AR will always > MR.

This is unless you have a "giffen good" like patotoes during the Irish patatoe famine. At one point the demand curve started to curve upward again. Th Irish could not afford anything else when spuds reached a certain price so all the money they would have otherwise on other goods was spent on spuds. Price went up and so did amount demanded. MR was > AR. A strange situation but it happened anyway.

Answer 2

With your standard demand curve in economics the Marginal revenue is always lower than the average revenue because it assumes that a company will always sell to the people who are willing to pay the most first and so each extra unit sold will be done so at a lower price.

However, this does rely on the fact that peoples demand is independent of whether somebody else has purchase the good.

There could be a case where one person buying a good could increase what somebody else is willing to pay for the good. For example imagine nobody owns a telephone, initially the first tennis phone might only be able to be sold for a very low price e.g. $1 as nobody want a phone if they cant ring anybody. However once that phone is sold the price the second one can be sold for is higher e.g. $10 as whoever buys it can now use it to phone the first person. This means the marginal revenue from the second phone $10 would be higher than average revenue $1 ( $1 revenue / 1 racket).

Another example could be where somebody famous purchases a good this could boost demand for the good thus pushing up the price people are willing to pay and making the marginal revenue above the average revenue.

Unfortunately I cant give you any links to help on the topic but if you try searching for information on network effects hopefully you should find something. Best of luck.