Alright, So here we have a market for cable subscriptions. So we can imagine we're in some small town where there's only one cable provider for your cable tv and they have a monopoly over cable subscriptions in this small town. Now, in my example, it's really simple. It's a really small town. We're gonna talk about anywhere from 0 to 5 subscribers, but we're just keeping it simple just to keep the math easy. And we're gonna reach the same conclusions anyways. Okay, so one more thing to note, and I mentioned this in the previous video. If you did monopolistic competition already, if you did the other market structure monopolistic competition, it's exactly the same. I'm even using the same example here. No cares given. All right. So let's go ahead and and dive right in. So, we've got we've been given some quantities and prices here. Right? And notice that as the quantity increases the price decreases, right? This is that law of demand, um we have to we have to decrease the price to increase the quantity. Right? So let's go ahead and discuss with total revenue, average revenue and marginal revenue in these cases. So, we've got our formulas here, total revenue, we've discussed before that price times the quantity. So let's go ahead and do some multiplication here. Zero times 80. Right, total revenue is going to be zero. There, there was no sales. How about when we have one subscriber paying 70. Well, that's gonna be 70 right, two times 61, times 50, that's 1 54 times 40 is 1 60 then five times 30 is 1 50 there. Right? So you can see that the total revenue was increasing increasing to a point and then it decreased again. Right? Um So let's talk about average revenue and remember when we we proved out that average revenue just equals price. Right? The total revenue divided by quantity where total revenue is price, times quantity, right? That's what total revenue equals price, times quantity. All these quantities just go away and we're left with just price. Okay, So we could just double check here and we could um well in this case you can't divide by zero but we could just test it just in case. Right, So we take our total revenue of 70 divided by our subscribers of one and we're gonna get 70. Right? That is the price. Also write the price was 70 Average revenue is 70. How about the next 11 20 divided by two, gets us 60. Right and 60 again is the price. So there you go. You're gonna see that the average revenue is always gonna just equal the price. 50, 40 and 30. Right? All the way down, average revenue just equals price. Okay, And that average revenue is our demand curve. Right? So notice here, if we go to the curve at one quantity, right, one subscriber, we're at 70 right? And that is our average revenue here to subscribers were at 60 and that's our average revenue three. Right? So you see that at each of these points we are um on our demand curve there. So our demand curve is this curve that we've got here and it's equal to average revenue. Okay, so our demand curve is our average revenue. Now let's think about our marginal revenue. Okay, so marginal revenue. Right, this is going to be the change in total revenue, change in total revenue over change in quantity. Right? But in general this change in quantity is just gonna be one, right? We're just increasing by one subscriber each time. So it's really just, what is the change in total revenue? So let's look at that now. So in the first case right, we had zero revenue and then we went up to 70 revenue when we got our first subscriber. So our marginal revenue there was 70 right? We added one subscriber and we got 70 more revenue. How about when we added the second subscriber? Well, our revenue was already 70 and we added another 50 right to get up to 1 20. 1 20 minus 70. Is that 50 in marginal revenue? The next one we already had 100 and 20 in revenue and it got us up to 1 50. So the 1 50 minus the 1 20 is another 30 in revenue. And how about the next one? Well, we already had 1 50 then we went up to 1 60 right? So we got an additional 10 in revenue there. And how about this last one? We were at 1 60 and we went back down to 1 50 right? We lost some marginal revenue there. So we had negative marginal revenue, negative 10 marginal revenue. So look at this, marginal revenue is not constant, right? In perfect competition, marginal revenue was always just the price, price, price, price was marginal revenue. But here, since we have a downward sloping demand curve, our marginal revenue is decreasing. Okay, So let's go ahead and draw this marginal revenue curve on the graph. So we had one subscriber quantity of one, we were at 70. Let me erase these points here. And then when we had to subscribers, marginal revenue was 53 subscribers. We were down at 30 10 and then it was like negative 10. So it went under the graph there. So, if we connect these points right here, right? Something like that, where we've now drawn in our marginal revenue curve. Okay, so there you go. The marginal revenue curve is less than the demand curve, right? It's a different shape and it's always gonna kind of do what we see here is gonna have like more of a slope and it's gonna come down just under the demand curve like that. Okay, so, we'll see more examples of marginal revenue, but the key here is that this is unlike perfect competition, right in perfect competition. We saw that the marginal revenue equaled the average revenue, equaled the price, and there was that flat demand curve. No longer. Right now, we've got the downward sloping demand curve and marginal revenue underneath it. Okay, so that's gonna have some implications. Remember when we're thinking about profit maximizing marginal revenue, equally marginal cost. So we're gonna see how this has implications on what we're going to produce, how we maximize profit. Alright, So before we move on, let's go ahead and do some practice video, practice problems about this topic. And then we'll go on to discussing profit. All right, let's do that now.