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UTILITY MEASUREMENT: A quantification of the satisfaction of wants and needs achieved through the consumption of goods and services. In principle, utility measurement can take one of two forms: (1) cardinal, which is based on numerical values (1, 2, 3, etc.) and (2) ordinal which is based on rankings (first, second, third, etc.). While the hypothetical instructional analysis of utility relies on cardinal utility, ordinal utility is a more realistic way to measure satisfaction.
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                           TOTAL REVENUE CURVE, PERFECT COMPETITION: A curve that graphically represents the relation between the total revenue received by a perfectly competitive firm for selling its output and the quantity of output sold. It is combined with a perfectly competitive firm's total cost curve to determine economic profit and the profit maximizing level of production. The slope of the total revenue curve is marginal revenue. Perfect competition is a market structure with a large number of small firms, each selling identical goods. Perfectly competitive firms have perfect knowledge and perfect mobility into and out of the market. These conditions mean perfectly competitive firms are price takers, they have no market control and receive the going market price for all output sold.The total revenue curve reflects the degree of market control held by a firm. For a perfectly competitive firm with no market control, the total revenue curve is a straight line. For firms with more market control, especially monopoly, the total revenue curve is "hump shaped," increasing, reaching a peak, then declining. The slope of this total revenue curve is marginal revenue. Total Revenue Curve,
Zucchini Style |  |
Total revenue is commonly represented by a total revenue curve, such as the one displayed in the exhibit to the right. This particular total revenue curve is that for zucchini sales by Phil the zucchini grower. The vertical axis measures total revenue and the horizontal axis measures the quantity of output (pounds of zucchinis). Although quantity on this particular graph stops at 10 pounds of zucchinis, the nature of perfect competition indicates it could go higher. This curve indicates that if Phil sells 1 pound of zucchinis, then he receives $4 of total revenue. Alternatively, if he sells 10 pounds, then he receives $40 of total revenue. Should he sell 100 pounds, then he would move well beyond the graph, with $400 of total revenue. The "curve" is actually a "straight line" because Phil is a price taker in the zucchini market. He receives $4 for each pound of zucchinis sold whether he sells 1 pound or 10 pounds. The constant price is what makes Phil's total revenue curve a straight line.
Recommended Citation:TOTAL REVENUE CURVE, PERFECT COMPETITION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 29, 2024].
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Today, you are likely to spend a great deal of time searching for a specialty store looking to buy either software that won't crash your computer or any book written by Stephan King. Be on the lookout for deranged pelicans.
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The Dow Jones family of stock market price indexes began with a simple average of 11 stock prices in 1884.
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"Something in human nature causes us to start slacking off at our moment of greatest accomplishment. As you become successful, you will need a great deal of self-discipline not to lose your sense of balance, humility and commitment." -- H. Ross Perot
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