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Marginal revenue
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==Marginal revenue curve== [[File:Costcurve - Marginal Cost 2.svg|thumb|Marginal revenue under perfect competition]][[File:MarginalRevenue.jpg|thumb|Marginal revenue under monopoly]]The marginal revenue curve is affected by the same factors as the demand curve β changes in income, changes in the prices of complements and substitutes, changes in populations, etc.<ref>{{Cite book |last=Landsburg, Steven E. |title=Price theory and applications |date=2013 |isbn=978-1-285-42352-4 |edition=Ninth |location=Stamford, CT |oclc=891601555}}</ref> These factors can cause the MR curve to shift and rotate.<ref>Landsburg, S Price 2002. p. 137.</ref> Marginal revenue curve differs under perfect competition and imperfect competition (monopoly).<ref name=":1">{{Cite web|last=Kumar|first=Manoj|date=2015-05-08|title=Revenue Curves under Different Markets (With Diagram)|url=https://www.economicsdiscussion.net/revenue/revenue-curves-under-different-markets-with-diagram/6877|access-date=2020-10-26|website=Economics Discussion|language=en-US}}</ref> Under [[perfect competition]], there are multiple firms present in the market. Changes in the supply level of a single firm does not have an impact on the price in the market.<ref>{{Cite web|title=The Supply Curve of a Competitive Firm|url=https://saylordotorg.github.io/text_microeconomics-theory-through-applications/s10-05-the-supply-curve-of-a-competit.html|access-date=2020-10-26|website=saylordotorg.github.io}}</ref> Firms follow the price determined by market equilibrium of supply and demand and are [[price takers]].<ref>{{Cite web|title=Demand in a Perfectly Competitive Market|url=https://www.cliffsnotes.com/study-guides/economics/perfect-competition/demand-in-a-perfectly-competitive-market|access-date=2020-10-26|website=www.cliffsnotes.com}}</ref> The marginal revenue curve is a horizontal line at the market price, implying perfectly elastic demand and is equal to the demand curve.<ref>{{Cite book |author=Russell W. Cooper |author2=Alun Andrew John |title=Microeconomics : theory through applications |year=2011 |isbn=978-1-4533-1328-2 |location=Arlington, Virginia |oclc=953968136}}</ref> Under [[Monopolistic competition|monopoly]], one firm is a sole seller in the market with a differentiated product.<ref name=":1" /> The supply level (output) and price is determined by the monopolist in order to maximise profits, making a monopolist a [[price maker]].<ref>{{Cite book|last=McLean, William J. (William Joseph)|url=https://www.worldcat.org/oclc/775406167|title=Economics and contemporary issues|date=2013|publisher=South-Western Cengage Learning|others=Applegate, Michael.|isbn=978-1-111-82339-9|edition=9e|location=Mason, Ohio|oclc=775406167}}</ref> The marginal revenue for a monopolist is the private gain of selling an additional unit of output. The marginal revenue curve is downward sloping and below the demand curve and the additional gain from increasing the quantity sold is lower than the chosen market price.<ref>{{Cite web|last=Tuovila|first=Alicia|title=Marginal Revenue (MR) Definition|url=https://www.investopedia.com/terms/m/marginal-revenue-mr.asp|access-date=2020-10-26|website=Investopedia|language=en}}</ref><ref name=":7">{{Cite web|title=Marginal revenue for a monopolist|url=https://www.economics.utoronto.ca/osborne/2x3/tutorial/MR.HTM|access-date=2020-10-26|website=www.economics.utoronto.ca}}</ref> Under monopoly, the price of all units lowers each time a firm increases its output sold, this causes the firm to face a diminishing marginal revenue.<ref>{{Cite web|title=The Monopoly Model|url=https://saylordotorg.github.io/text_principles-of-microeconomics-v2.0/s13-02-the-monopoly-model.html|access-date=2020-10-26|website=saylordotorg.github.io}}</ref>
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