The Relationship between Average and Marginal Revenue!
Given that both average revenue (AR) and Marginal revenue (MR) curves are of straight-line shape, it can be shown that (MR) curve will cut the distance between AR curve and the Y-axis in the middle, in other words, when both AR and MR curves are straight lines, then if a perpendicular is drawn from a point on the AR curve to the F-axis, MR curve will cut this perpendicular at its middle point.
Consider Fig. 21.3, where both AR and MR curves are straight lines. Point A is taken on the average revenue curve and a perpendicular AB is drawn to the Y-axis. MR curve cuts the perpendicular AB at point C. Now, if MR curve cuts halfway the distance between AR curve and the Y-axis, then AC must be equal to BC. So in order to show that MR cuts halfway the distance between AR and the F-axis, we have to prove in Fig. 21.3 that AC = BC.
