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June 27, 2022 

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ZERO BOND: Also termed a zero coupon bond, a bond that does not pay interest, in which the return is generated by the difference between the purchase price and the face value paid at maturity. Because they do not pay interest, zero bonds are sold at a discount. For example, a $10,000 zero bond that matures in one year, would generate a 10% return if it sold at a discount of $9,000.

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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 Curve, Perfect Competition
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.

<= TOTAL REVENUE CURVE, MONOPOLYTOTAL REVENUE, MONOPOLISTIC COMPETITION =>


Recommended Citation:

TOTAL REVENUE CURVE, PERFECT COMPETITION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: June 27, 2022].


Check Out These Related Terms...

     | total revenue | total revenue, perfect competition | total revenue curve, monopoly | total revenue curve, monopolistic competition | average revenue curve, perfect competition | marginal revenue curve, perfect competition | total cost curve | total product curve |


Or For A Little Background...

     | market structures | perfect competition | perfect competition, characteristics | perfect competition, demand | demand | demand price | law of demand | efficiency |


And For Further Study...

     | short-run production analysis | short-run analysis, perfect competition | long-run analysis, perfect competition | perfect competition, efficiency | perfect competition, breakeven output | perfect competition, profit analysis | short-run production alternatives, perfect competition | perfect competition, profit maximization |


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