Class 11 Micro Economics Notes · CBSE
Revenue Curves under Perfect Competition
Revenue Curves under Perfect Competition — understanding AR-MR and TR behaviour when the firm is a price-taker. CBSE Class 11 Microeconomics notes with schedules and curve diagrams.
Last updated: 12 Sep 2026
Notes
When Price Remains Constant — The Price-Taker
No firm can influence the market price. Revenue from every additional unit (MR) equals AR.
AR and MR Curves Coincide
When a firm can sell more output at the same price, AR = MR at all levels of output.
Price = AR = MR
| Units sold | Price / AR (₹) | TR (₹) | MR (₹) |
|---|---|---|---|
| 1 | 5 | 5 | 5 |
| 2 | 5 | 10 | 5 |
| 3 | 5 | 15 | 5 |
| 4 | 5 | 20 | 5 |
| 5 | 5 | 25 | 5 |
Both AR and MR curves coincide as a horizontal straight line parallel to the X-axis. The demand curve is perfectly elastic.
TR Curve — a Straight Line from the Origin
Since MR remains constant, TR increases at a constant rate — a positively sloped straight line starting from the origin.
MR = AR = 5
TR
| Units sold | Price / AR (₹) | TR (₹) | MR (₹) |
|---|---|---|---|
| 1 | 5 | 5 | 5 |
| 2 | 5 | 10 | 5 |
| 3 | 5 | 15 | 5 |
| 4 | 5 | 20 | 5 |
| 5 | 5 | 25 | 5 |
TR = Area under the Price Line
When price is constant, Price = AR = MR. So TR = ΣMR = area under the price line = OP × OQ.
Live TR Readout
TR = OP × OQ = 5 × 3
₹15
Area = TR = ΣMR
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Key Takeaways
Key Takeaways
- Under perfect competition, AR = MR = Price at all levels — both curves coincide as a horizontal line.
- The demand curve (AR curve) is perfectly elastic.
- TR increases at a constant rate — a straight line from the origin.
- TR = ΣMR = area under the price line = OP × OQ.
- The firm is a price-taker.