Question: Carefully explain how changes in price would affect total revenue. That is, would total revenue increase, decrease or stay the same, and why? Price rises

  1. Carefully explain how changes in price would affect total revenue. That is, would total revenue increase, decrease or stay the same, and why?
    • Price rises and demand is inelastic.
    • Price falls and demand is elastic.
    • Price rises and demand is unitary elastic.
  2. Graphically show and explain how firms in pure competition market structure end up with zero economic profit in L-R.
  3. Graphically explain why MC cuts both ATC and AVC curves at their minimum point in short-run.

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