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RECESSIONARY GAP: The difference between the equilibrium real production achieved in the short-run aggregate market and full-employment real production the occurs when short-run equilibrium real production is less than full-employment real production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is an inflationary gap.
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                           AVERAGE REVENUE CURVE, PERFECT COMPETITION: A curve that graphically represents the relation between average revenue received by a perfectly competitive firm for selling its output and the quantity of output sold. Because average revenue is essentially the price of a good, the average revenue curve is also the demand curve for a perfectly competitive firm's output. 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 average revenue curve reflects the degree of market control held by a firm. For a perfectly competitive firm with no market control, the average revenue curve is a horizontal line. For firms with market control, especially monopoly, the average revenue curve is negatively-sloped. Average Revenue Curve,
Zucchini Style |  |
Average revenue is commonly represented by an average revenue curve, such as the one displayed in the exhibit to the right. This particular average revenue curve is that for zucchini sales by Phil the zucchini grower, a presumed perfectly competitive firm. The vertical axis measures average 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 easily go higher. This curve indicates that if Phil sells 1 pound of zucchinis, then his revenue per unit is $4. However, if he sells 10 pounds, then he also receives $4 of average revenue. Should he sell 100 pounds, then he moves well beyond the graph, but his average revenue remains at $4. The average revenue curve is actually the demand curve for Phil's zucchinis. In fact, in the same way that average revenue is just another term for price, the average revenue curve is just another term for demand curve.
Recommended Citation:AVERAGE REVENUE CURVE, PERFECT COMPETITION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: April 26, 2018].
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Today, you are likely to spend a great deal of time surfing the Internet trying to buy either a computer that can play video games and burn DVDs or a black duffle bag with velcro closures. Be on the lookout for rusty deck screws.
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A communal society, a prime component of Karl Marx's communist philosophy, was advocated by the Greek philosophy Plato.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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MSE
Mean Squared Error
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