Theory of Cost and Theory of Firm

Fixed costs are those which do not vary with the quantity of output produced
Variable costs are those which vary with the quantity of output produced

AFC = FC/Q
AVC = VC/Q
ATC = TC/Q

For any firm Average revenue is the demand curve. How? See below

AR = TR/Q = PXQ/Q = P(which is nothing but the demand curve)

Practice the various cost curves(ATC,AVC,AFC,MC)

Remember , the marginal cost surve crosses the average cost curve at the minimum point which is also called efficient scale.

Also remember
Marginal cost < average total cost, average total cost is falling
Marginal cost > average total cost, average total cost is rising

For a competitive firm AR is independent of output and is parallel to the horizontal axis. How? See the explanantion below

Competitive firm is a price taker firm, you as a firm cannot increase/decrease the price. So, you will charge the same price if one buys 1 item or more than 1 item. So, AR remains the same for any quantity demanded.

For a competitive firm demand curve(AR) is infinitely elastic and for these firms AR=MR=P

Profit maximizing point is at MR=MC