CBSE Class 12-commerce Answered

i. AR stands for Average Revenue i.e. revenue per unit of output sold.

ii. MR stands for Marginal revenue i.e. Chnage in total revenue which results from the sale of one more unit of a commodity.

If AR remains constant then MR = AR, hence it indicates by constant line. OR if it is not constant, but declining then MR is declining by Re 1.

iii. Marginal cost is additional cost owingto the production of an additional unit of output.

Relationship: Rising MC cuts MR at equilibrium point maximise its profit, satisfying two conditions- MR = MC and MC curve is rising (or it is cutting MR line from belwo.