Professional Documents
Culture Documents
1 20 20 20
2 30 15 10
3 35 11.6 5
4 38 9.5 3
5 40 8 2
6 62 10.3 22
Graphically Representation of Total,
Average,& Marginal cost curve
Revenue Concept
Total Revenue:- Total revenue may be defined as
the total receipt of the firm from it
sales. It can be obtained by multiplying the price per
unit of the commodity with the total number of unit of
the commodity sold to the customer.
Total Revenue= Price per unit*Total No. of unit.
Average Revenue:- Revenue per unit of the
commodity sold, It can be easily calculated by dividing
total revenue by the number of unit sold.
Average Revenue = Total Revenue
Total output sold
Revenue Concept
Marginal Revenue:- Marginal revenue at any level
of firm output is the revenue added to the total
revenue by selling an additional unit of firm’s product.
Marginal Revenue = The difference between the
total revenue when ‘n’ units are sold & the new
total revenue when n+1 units are sold
Total, Average, Marginal Revenue
Schedule
No. of output Total revenue Average revenue Marginal revenue
1 10 10 10
2 19 9.5 9
3 27 9 8
4 34 8.5 7
5 40 8 6
6 45 7.5 5
7 49 7.0 4
8 52 6.5 3
9 54 6.0 2
10 55 5.5 1
Graphically Representation of
Total, Average,& Marginal Revenue
Price & Output
Determination Under
Perfect competition
Perfect Competition
Perfect competition is that there should be a
large number of firm.
Perfect competition buyer or seller are fully
aware of the nature of the product.
In Perfect competition product is Homogenous
no seller can change a price of the commodity.
Characteristic of Perfect
Competition
A large number of buyers & sellers.
Homogeneous Product.
Free entry & Free exit of the firm.
Perfect Knowledge.
Absence of artificial restriction.
No government intervention.
No existence of transport cost.
Perfect mobility of factor of production.
Price Determination
Price Determination under Perfect competition to
analyzed under three different time period:-
N’
Price N
N’’
Short Run
Supply of the commodity in this period can be
adjusted to the changed demand, through only
partially.
The supply will be adjusted to the demand with
the help of existing capital equipment.
Long Run
The supply of the commodity can be adjusted
fully to the changed demand.
The supply will be adjusted to the demand not
only with the existing , but also with the
additional capital equipment.
Average & Marginal Revenue
curve under perfect
Competition
Price & Output
Determination Under
Monopoly
Monopoly
Monopoly:- The word monopoly is made up of
two word Mono & Poly.
Mono means single while poly means selling .
If there is only one single seller of a product in
the market, that situation will be referred to as
monopoly.
Characteristic of Monopoly
1. Short run
2. Long run
Average & Marginal Revenue
curve under Monopoly
Short Run
Pricing & output decisions under monopoly are
based on profit maximization hypothesis.
Graphically Representation
Long Run
Graphically Representation
Price & Output
Determination Under
Monopolistic
Monopolistic
Unit of product
Constant
Scale of Production
Factors of Production
Meaning:- The term “ Factors of production”
refers to those good & services
which aid the productive process.
1. Land
2. Labour.
3. Capital.
4. Organization.
Land
The term land is very comprehensive &
includes all things which is not made man.
It includes within itself several things such as
land surface, air, water, minerals, forests, rivers,
lakes, seas, etc.
Labour
The term labour refers to all those activities
physical & mental, which are undertaken by
man by exchange for a monetary reward.
Example:- If a person undertakes certain
physical & mental activities for his own
recreation, they cannot be termed as labour
Capital
The term capital in economics refers to that
part of the saved up wealth which is utilized in
the production of further wealth.
It include cash, machine, tools, row material
etc. which are used for further production of
wealth.
Organization
Organization refers to combine the three factors
of production , assigning work to each, bearing
the risk, etc.
Organizer assign work to the three factors
supervises their working & undertakes the risk
inherent in the production.
Types & Forms of business
Organization
Single Proprietorship.
Partnership.
Joint Stck Company.
Co. Operative Enterprise.
State Enterprise.
Sole or Single Proprietorship
This refer to that form of business organization
in which there is only one single owner of the
business.
He bears the entire risk of the business.
If the firm earn profit goes to him only.
If the firm suffers a loss, the entire burden goes
to him.
It is a oldest & Simplest form of the
organization.
Characteristics of Single
Proprietorship
1. Low cost of Production.
2. Close contract with customer.
3. Close contract with workers.
4. Promptness in decision.
5. Security of trade secrets.
6. Full control.
7. Direct Motivation.
Disadvantages
1. Unlimited Liability.
2. Limited Economic Resources.
3. Limited of Organization Control.
4. Inability to face competition from bigger units.
5. Limited area of Operation.
6. No Large Scale Economics
Partnership
A partnership is that form of organization in which two
or more partners jointly own an enterprise & agree to
share the profit in the pre determined proportion.
Partnership based on partnership deed the number of
partners, their relationship, their capital contribution,
their right, & duties, the method of sharing the profit all
these are clearly mentioned in the partnership
agreement.
Advantages of Partnership
No difficulty in setting up parnership.
Availability of large capital.
Uses of diverse talents.
Risk sharing.
Availability of easier & larger credit.
Easy formation & Easy disoluation.
Disadvantages Of
Partnership
Unlimited Liability.
Lack of Efficiency.
Delay in decision making.
Instability.
Limited on transfer of share.
Joint Stock Company
It is also known as the corporate form of
business.
A joint stock company is an association of
individual as shareholders who are autorized
by the government to run a particular
business.
Joint stock company raises its capital in two
ways:-
1. Through Share.
2. Through Debentures.
Advantages of joint stock
company
Adequacy of capital.
Economics of large scale production.
Limited Liability.
Specialized management.
Suitable for large enterprises
Disadvantages of joint stock
company
Difficulty of Establishment.
Manipulation by Directors.
Delay in decision.
Lack of interest in company matters.
Joint stock company “ Democratic “ only in
name.
Co-Operative Enterprise
The term co- operative means “ To work
together” but in economics it carries a slightly
different but wider meaning.
“ Co operation may be defined as that type of
economic organization in which a number of
persons with common economic objectives
organize themselves on a basis of equality for
the fulfillment of those objectives in practice.
Characteristics of co
operative enterprise
1. To work together on a organized basis.
2. This organization is purly voluntary.
3. Nearness of members to each other.
4. Equality.
5. Self dependent
6. Economy
7. Democratic organization.
8. Each for all & all for each
State/ Public Enterprise
The State Enterprise refer to those business
enterprises whose ownership & Management are
directly in the hands of the government such
enterprises are the exclusive property of the state &
are directly managed by it.
State Enterprise are financed by the government &
also managed by government.
These type of enterprise are financially independent.
The objective of State Enterprise is to provide service
to the society.
Example:- Railways & Telegraphs department are
government enterprise.