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Class 11 Micro Economics Notes · CBSE

Relationships: TR-MR and AR-MR

Relationships: TR-MR and AR-MR — understanding the six key rules connecting the revenue concepts. CBSE Class 11 Microeconomics notes with curve diagrams and solved examples.

Last updated: 12 Sep 2026

Notes

General Relationship between AR and MR

The relationship between AR and MR depends on whether price remains the same or falls with output.
1

AR increases as long as MR > AR.

2

AR is maximum when MR = AR.

3

AR falls when MR < AR.

-10-505AR and MR (in ₹)01234567Units SoldMR peaks before ARMR < ARMR = 0

Relationship between TR and MR (When Price Falls)

TR rises as long as MR is positive. It reaches its maximum when MR is zero, and declines when MR becomes negative.

1

When MR is positive, TR increases.

2

When MR is zero, TR is at its maximum.

3

When MR is negative, TR falls.

010203040TR (in ₹)01234567Units SoldA — TR max
-10-505101520MR (in ₹)01234567Units SoldB — MR = 0

Zero and Negative MR

MR can be zero and even negative when the price falls with a rise in output.

MR is zero when TR remains the same. MR is negative when TR falls. However, MR cannot be zero or negative when price remains constant.

TR = ΣMR but TC ≠ ΣMC

TR = ΣMR (valid)

TR = MR₁ + MR₂ + … + MRₙ = ΣMR.

TC ≠ ΣMC (not valid)

TC = TFC + TVC. Since MC is not affected by TFC, TC cannot be calculated as the summation of MC.

Key Takeaways

Key Takeaways

  • When MR > AR, AR increases. When MR = AR, AR is maximum. When MR < AR, AR falls.
  • When MR is positive, TR increases. When MR is zero, TR is maximum. When MR is negative, TR falls.
  • MR can be zero or negative under imperfect competition but never under perfect competition.
  • TR = ΣMR is always valid. TC ≠ ΣMC because TC includes TFC.