Under Monopolist and perfect competition

Perfect Competition:

Under perfect competition, when price remains constant, firm can sell any quantity of

output at the fixed by the industry say $5 here. As a result, MR curve is horizontal straight

line and parallel to x-axis and (MR=AR)


Fixed Cost $30
Q FC TVC TC ATC AVC AFC MC TR AR MR
1 30 7.39 37.39 37.39 7.39 30 7.39 5 5 5
2 30 14.78 44.78 22.39 7.39 15 7.39 10 5 5
3 30 22.17 52.17 17.39 7.39 10 7.39 15 5 5
4 30 29.56 59.56 14.89 7.39 7.5 7.39 20 5 5
5 30 36.95 66.95 13.39 7.39 6 7.39 25 5 5
6 30 44.34 74.34 12.39 7.39 5 7.39 30 5 5
11.675714 4.28571428
7 30 51.73 81.73 29 7.39 6 7.39 35 5 5
8 30 59.12 89.12 11.14 7.39 3.75 7.39 40 5 5
10.723333 3.33333333
9 30 66.51 96.51 33 7.39 3 7.39 45 5 5
10 30 73.9 103.9 10.39 7.39 3 7.39 50 5 5



Fixed Cost $15
Q FC TVC TC ATC AVC AFC MC TR AR MR
1 15 7.39 22.39 22.39 7.39 15 7.39 5 5 5
2 15 14.78 29.78 14.89 7.39 7.5 7.39 10 5 5
3 15 22.17 37.17 12.39 7.39 5 7.39 15 5 5
4 15 29.56 44.56 11.14 7.39 3.75 7.39 20 5 5
5 15 36.95 51.95 10.39 7.39 3 7.39 25 5 5
6 15 44.34 59.34 9.89 7.39 2.5 7.39 30 5 5
7 15 51.73 66.73 9.532857143 7.39 2.142857143 7.39 35 5 5
8 15 59.12 74.12 9.265 7.39 1.875 7.39 40 5 5
9 15 66.51 81.51 9.056666667 7.39 1.666666667 7.39 45 5 5
10 15 73.9 88.9 8.89 7.39 1.5 7.39 50 5 5



From this we can understand that the company’s MR is less than it’s MC because the

company is producing too much. The marginal revenue on its additional units sold is lower

than the price because the company gets lower revenue. At the same time MR can become