Revenue in different types of market

Revenue in different types of market        

Pure competition – in this market every manufacturing produce same types of goods & services. There are lots of manufacturing units available in the market. Demand & supply balance the market and fix the price in the market. The price is also same in the whole market.

Revenue in Pure Competition

Monopoly or imperfect competition – in this market, only one manufacturing units available in the market and market demand is already given. Manufacture adjust its price its own. Average revenue is down in the slope and marginal revenue stand below its AR. Company know the demand and they sell the more quantity on a lower price that way MR below the AR.

Revenue in monopoly

Oligopoly – in this market, there are few manufacturing units and also their behaviour influences the other unit’s policy. If a company increases their price then other company not follows the same because consumer always prefer to buy a cheaper/low price things. In this market AR & MR are down in slope. MR put down or below the AR line but they are not in direct down but there are lot of kinks in the line.

Revenue in Oligopoly

                                                                                                                                                

Different types of Revenue

Different types of Revenue

Every company starts its business to earn profit. For this, a company manufactures different types of goods & services and sells in the market. In the production process, a company spent lot of expenses and after selling, a company earns revenue. So revenue is an important part of a business because excess revenue over expenditure is the profit of a company.

Different types of Revenue

Types of revenue –

Total Revenue – a company sells its all goods & services at a price, the amount that a company gets after selling all its goods & services that are called total revenue. For example – if a company manufacturing 100 units and sell at a price of 5 per units so total revenue is R= p*q (100*5=500)

Average Revenue – if a company divides its total revenue by the total manufacturing quantity, we get the average revenue. Like revenue/quantity or (R/Q or 500/5= 100). 100 is our average revenue.

Marginal Revenue – every increase in the revenue by increasing the selling quantity of goods and services, we call it marginal revenue.

Different types of Cost

Different types of Cost

Every production has a process and in this process a firm spent lot of different types of wages, we called it money cost like wages, raw-materials, equipment's, capitals good, rent, interest & different types of tax. All these types of cost are called accounting costs. Money costs are also called explicit costs.

Different types of Cost

Production cost – in production process, we include lot of cost and mostly we divide all cost in two parts, like –

ü  Variable cost – these are the cost which is related fully with our production process. If we increase our production, variables cost automatically increased with it, for example – wages, raw-materials, fuel or other production related costs. These costs have a direct co-relation with production. These cost decrease if our production decrease

ü  Total fix cost – those cost which is not related with production process. We also called them supplementary cost which does not changed according to the production level like rent, interest, depreciation or fix staff. A company must pay for these costs if they close their production. We also called them overhead costs.

Different types of Cost

ü  Real cost – in a production process, a society also sacrifices and do lot of efforts, we call it a real cost like saving by society/investor or sacrifices from leave by an employees.

ü  Opportunity cost – a cost which is related with resources used in different production opportunity, because our resources are rare & also have multiple used for different out- comes or things. In other words, it is a second best option for the use of rare resources. It include both explicit and implicit costs

Law of Return to Scale

Law of Return to Scale

Laws of return to scale describe the future relationship of all input and output. In the long run, we are able to bring change in our all fix and variable factor according to our requirement. If we are looking for a long term demand in particular so we are able to buy new land, new plant or hire new man power and meet the requirement. But this is for long run & we assume that we are able to make any changes in production line.

Law of Return to Scale

But we have some assumption for this like –

ü  All input are variables

ü  Clear road map for manpower and equipment are given

ü  No change in technology

ü  There are full competition

ü  Production are calculated in quantity

With these assumptions, we are able to bring change in our all input with-out a ratio. So we are able to bring a wide change in our production & with a high swing.

We have three stages for this –

1^st – Increase return to scale – in it, if we start increasing our input so our productions increase more than our input

2^nd – Constant returns to scale – when we continue increasing our input, after a stage our marginal production become equal with every new units and our total production have no multiple increment

3^rd – Diminishing return to scale – in final stage, our marginal production starts decline with every new unit. Our fix factor or fix equipment become less productive. There are also a lack of capital use and decision – making.

                                         

Law of variables proportion

Law of variables proportion

This law related with the variable factor when we assume that rest of the factor remains stables and we bring change or increase in the variables factor then our production increase in the short run. For example – if we assume that our land, plant and equipment are stables but we increase our variables factor like man power so we are able to increase our production in short run, but after a point or a production hike our marginal production, average production & total production start decline.

Law of variables proportion

We divide all our production lines into three parts like - 

In the first stage, we increase our production at a high rate. We have lot of fix assets or factor which is not used properly so when we start using extra variables factor then we are able to use our fix factor or assets in full-swing so our production increase on high speed. In starting, we get increasing return or high return on our fix & variables factors.

In 2^nd stage, we increase our production but at a normal rate. We call this stage a law of Diminishing return or decline return on factor. In this stage, we increase our variables factor, after a stage, our average production become zero. In this point our total production on a high.

In 3^rd stage, our production start decline. We called it a negative marginal return on scale. In this stage, our total production start decline and our marginal production become negative.

Price elasticity of Demand

Price elasticity of Demand

Elasticity – a relationship between change in demand and change in price of a particular thing. How much change takes place in demand when there is a change in price. How much change comes in demand if there is a change in price? We analysis it and show in a ration or percentage. For example, if we make a 2% price hike so how much percentage change come in demand. It may be more than 2% or less than 2% or equal to 2%.

We have five different options for this like: –

ü  Unit change – when there is a change in demand is equal to change in price. We call it a unit changes. Change in y to y1 is equal to x to x1.

unit change

ü  Elasticity greater then unit – when there is a change in demand is more than the change in price. Change in y to y1 is greater than x to x1.

Elasticity greater then unit

ü  Elasticity less than unit – when there is a change in demand is less than the change in price. Change in y to y1 is less than the change in x to x1.

Elasticity less than unit

ü  Zero elasticity – when there is no change in demand at any change in price.

zero elasticity

ü  Infinite elasticity – when there is a infinite change in demand with a little or fewer or minor change in price.  

Infinite elasticity

What do you mean by Decrease in Price

What do you mean by Decrease in Price?

Demand of any goods and services always show a preference or choice among the options available in the market. A consumer always buys that combination where his satisfaction is higher. In other words, we can say that demand always show a “strong order from consumer side”. 

We know that when there is “increase in the income, we increase our buying behaviour. Sorely demand decrease of there is a price hike of that particular goods and services”.

Decrease in Price

Fall or decrease in Price

We assume that a consumer spend all his income to buy these two product. So, consumers always prefer to buy a strong combination where he will be maximum satisfaction. Demand has a positive correlation with income. We prefer a cheaper goods & services against a high price. If there is a fall or decrease in price of goods and services in our combination so we always prefer to buy that product or we increase the quantity of that product or services.

If there is a decrease in the price of ‘y’ goods so consumers increase the buy of ‘y’ in the combination. A new consumer combination line is drawn ‘LN’. When there is a decrease in price of ‘y’, it increases the real income of consumer. So a consumer shift its money to buy more ‘y’ goods and drawn another line like ‘AB’. We called it “over-compensation effect”. Now, a consumer prefers to buy a combination on ‘c’, where good ‘y’ is more than the good ‘x’.

What do you mean by Rise in Price

What do you mean by Rise in Price?

Demand of any goods and services always show a preference or choice among the options available in the market. A consumer always buys that combination where his satisfaction is higher. In other words, we can say that demand always show a “strong order from consumer side”. We know that when there is “increase in the income, we increase our buying behaviour. Sorely demand decrease of there is a price hike of that particular goods and services”.

Rise in Price

Rise in Price

We assume that a consumer spend all his income to buy these two product. So, consumers always prefer to buy a strong combination where he will be maximum satisfaction.

If there is an increase in the price of ‘y’ goods so consumers decrease the buy of ‘y’ in the combination. A new consumer combination line is drawn ‘LN’. When there is an increase in price of ‘y’, it decreases the real income of consumer. So a consumer shift its money to buy more ‘x’ goods and drawn another line like ‘AB’. We called it “over-compensation effect”. Now, a consumer prefers to buy a combination on ‘c’, where good ‘x’ is more than the good ‘y’.

Law of demand

Law of demand

Demand of any goods and services always show a preference or choice among the options available in the market. A consumer always buys that combination where his satisfaction is higher.

combination of good & services

                                                                                                 In other words, we can say that demand always show a “strong order from consumer side”. We know that when there is “increase in the income, we increase our buying behaviour. Sorely demand decrease of there is a price hike of that particular goods and services”.

Law of Demand

  Assumption for law of demand –

ü  There is no change in the consumer interest

ü  Combination of goods and services always show a consumer preference

ü  Consumer have a strong order for that combination

ü  Consumer choose one combination where other thing remain same

ü  Always prefer to buy more thing then few

ü  Consumer behaviour is given and consistent

ü  Always show a preference in different combination where ‘good x’ is preferred then ‘goods y’ and ‘goods y’ is preferred then ‘goods z’ then naturally ‘good x’ is preferred ‘then z’

ü  Always show a positive correlation between income and goods if income increase then a consumer increase its buy behaviour

   

Income Demand

Change in Income Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any products in an economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Income demand –

In income demand, we analysis the behaviour of income, when other thing remain same in economy, income demand represent the different -2 co-relation of goods and services with income. When there is an increase in the income, a consumer increases their buying behaviour so that they are able to buy more goods & services. So we can say that there is a direct co-relationship between income and demand.

Income Demand

When there is a increase in income from I to NI so then quantity will be shift from Q to Q1 and co-relation shift from A to B.

Decrease in Demand

Decrease in Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any products in an economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Decrease in Demand

When we discuss about demand & it analysis, we assume that other thing will be remain same. In other things, we include like income, interest in particular thing & price of other things. If there is a change in any one of the factor like income, if income decrease then our buying power decrease on same price list and know we are able to buy less products on the previous high price. We call it “shift of demand curve or decrease in demand”.

Decrease in Demand

These show that on same price we increase our demand from Z to Y and quantity also from Q to Q1.

Increase in Demand

Increase in Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any product I economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Increase in Demand

When we discuss about demand & it analysis, we assume that other thing will be remain same. In other things, we include like income, interest in particular thing & price of other things. If there is a change in any one of the factor like income then our buying power increase on same price list and know we are able to buy more products on the previous high price. We call it “shift of demand curve or increase in demand”.

Increase in Demand

These show that on same price we increase our demand from Y to Z and quantity also from Q to Q1.

What you know about Demand meaning of demand demand ka mtlb

What you know about “Demand”

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have a interest in that product & also have buying ability or money.

When, we accumulate all the demand of any product I economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Demand analysis – demand is the equal to the quantity which a consumer wants to but on different price when other thing remains same in the economy. Demand theory or curve show the buying behaviour of consumer on different price. If any things have a high price, few people show interest to buy on that price. But if same product have a less price or cheaper then lot of people show their interest to buy that product.

For example – if any things have a high price like 5 rupee then we buy 10 units,

4 rupee we buy 20 units,

3 rupee we buy 30 units,

2 rupee we buy 45 units,

1 rupee we buy 65 units

Demand with different price

These things show that on high price, we have low demand and on cheaper or low price, we have more or lot of demand.   


Increase in Demand 

Decrease in Demand

Income Demand

                                   

What you know about utility utility kya he

What you know about utility

Utility – a new classical theory which discuss about our satisfactions which we receive from every single units of consumption. In it, we count our satisfaction from consumption by taking some things in a series. In starting, we get more satisfaction but every new consumption of same units, it decreases our satisfaction level with every new consumption with step by step. In it, we assume that we are able to count our satisfaction in a unit and we call it “util”.

knowledge about Utility

Some assumption for theory –

ü  We are able to count our satisfaction level with every single unit of same consumptions

ü  Money is the main parameter for this

ü  Marginal utility of money remain unchanged or same

ü  We know the quality or availability of  different product

ü  We know the price of different product

ü   There is no alternative available

        

Total utility – when consumption the same thing in a series, he get utility from that but our utility of consumption is decreasing with every new consumption of the same unit. If we add all the utility of same things then we get the “total utility”. For example –

1^st banana give us a utility of 10 units,

2^nd banana give 7.5 units,

3^rd banana give 5 units,

4^th banana give 2.5 units and if we add all these utilities of banana then we get the total utility of banana which we receive.

Marginal utility – when we start the consumption of any goods and services, 1^st units give us a high level of satisfaction, 2^nd give us a less satisfaction then 1^st, 3^rd give us a less satisfaction then 2^nd. So every new units of consumption have less utility then it’s previous. Other way, we can say that marginal utility is decreasing with every new unit. For example –

1^st units have 10 & 2^nd units have 7.5 so total marginal utility is (10+7.5=17.5).

2^nd units 7.5 & 3^rd units have 5 so total marginal utility is (7.5+5=12.5).

3^rd units have 5 & 4^th have 2.5 so total marginal utility is (5+2.5=7.5). 



Demand - meaning & knowledge

What you about Price Mechanism Price mechanism kya he

What you about Price Mechanism

Price mechanism is a totally free financial system in which all its components or elements are free to take any financial decision like firm, consumers and other production factors. There are lots of authorities in the market. Individual & collective decision should be taken according to the market. These free mechanism help to develop a policy where all the price & trade fixed by their individual behaviour.

meaning of price mechanism

The role of price mechanism in economic

ü  What to produce and what quantity – this is the first step for price mechanism to determine – what to produce and what is the quantity of a particular things, we know that our available resources are rare so an optimum utilization will be there, when we know – what to produce and in what quantity then we draw a “production possibility curve” for economy. It also includes the quantity of capital & consumers goods and services. If we increase the supply of any product, we get fewer amounts due to their demand. For having less supply of any product, we receive a good price. So demand and supply fix a fare price mechanism for every-thing.

ü   How to produce – there are lot of production methods in economy. Every producer pay interest, salary, rent or interest as expenditure and also profit for his own. if we add all these things then we get the total cost of the production. In economy, if labor is available on a low cost then we use this method in productions. But if we have capital goods on a cheaper cost then we prefer this method. What types of method we adopt, it totally depends on the cost of the method.

ü  Income distribution – this is also a important part of price mechanism. In a free economy, income and goods distribution are inter-related. One side – household provides their services & receives wages, rent, income or interest and after that they buy goods and services. On the other hand, a firm produces goods & services by the help of house-hold or production factor. Consumers or house-hold by these goods & services and pay to firm for these things. So money will be moving from one hand to another and also making an equal distribution.

ü  Free mechanism help to establish a standard for work by using all rare resources.

ü  Price mechanism also motivate for economy growth. Price mechanism also motivate for improvement, innovations and R&D etc.