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ANNUITY: The receipt of payments at regular intervals from a established fund. Annuities are commonly used for insurance and retirement programs. It works in this way: A fund, which can be established either through a one-time sum of money or a series of payments, is exhausted over time with fixed, periodic payments. The amount of each payment depends on the interest accrued on the outstanding balance in the fund, and the length of time scheduled to exhaust the fund. For example, if your pension plan is based on an annuity that begins payments at the age of 65, then the size of the payments depends on whether you expect to live 5, 10, 15, or more years and set up payments accordingly. It's very similar to amortization, but in the reverse direction.
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                           AVERAGE REVENUE CURVE, MONOPOLY: A curve that graphically represents the relation between average revenue received by a monopoly 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 monopoly's output. Monopoly is a market structure with a single firm selling a unique good. As the only firm in the market, monopoly is a price maker and has extensive market control, facing a negatively-sloped demand curve. If a monopoly wants to sell a larger quantity, then it must lower the price.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,
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The average revenue curve for Feet-First Pharmaceutical is displayed in the exhibit to the right. Key to this curve is that Feet-First Pharmaceutical is a monopoly provider of Amblathan-Plus and thus faces a negatively-sloped demand curve. Larger quantities of output are only possible with lower prices.The vertical axis measures average revenue and the horizontal axis measures the quantity of output (ounces of medicine). Although quantity on this particular graph stops at 12 ounces of medicine, it could go higher. This curve indicates that if Feet-First Pharmaceutical sells 1 ounce of medicine (at $10 per ounce), then average revenue is $10 per ounce. Alternatively, if it sells 10 ounces (at $5.50 per ounce), then average revenue in is $5.50 per ounce. Should it sell 12 ounces (at $4.50 per ounce), then average revenue is $4.50 per ounce. For Feet-First Pharmaceutical the average revenue curve is also the demand curve. The curve is negatively sloped, meaning that larger quantities of output result in less average revenue. Although this average revenue curve, and preceding table of average revenue numbers, is based on the production activity of Feet-First Pharmaceutical, a well-known monopoly firm, they apply to any firm with market control. Monopolistic competition and oligopoly firms that also face negatively-sloped demand curves generate comparable average revenues.
Recommended Citation:AVERAGE REVENUE CURVE, MONOPOLY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 18, 2025].
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