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# Revenue Concepts

## Revenue Concepts

By Revenue of a firm is meant the total sale proceeds or the Total receipts of a firm from the sale of output. There are various kinds of revenues i.e. Total Revenue, Marginal Revenue, Average Revenue.
Total Revenue
It is the total amount received by a firm after selling the whole of output produced during a given period of time.

If a firm producing 100 chairs and sells in the market at Rs.100 per chair. The total revenue of the firm will be 1000.  TR = price x q.sold.

Marginal Revenue:– It is the net addition made to the total revenues by selling an extra unit produced. Marginal revenue indicates the rate of change of total revenue (MR=∆TR/∆Q).

Average Revenue:- It is the per unit revenues which is obtained by dividing the total revenue by no. of units sold in the market. e.g. If a firm sells 10 chairs for Rs.1000 then average revenues will be 1000 AR=TR/q.sold.
Revenue under perfect competition
 Price per unit Unit of output Total Revenue Marginal Revenue Average Revenue 1000 1 1000 1000 1000 1000 2 2000 1000 1000 1000 3 3000 1000 1000 1000 4 4000 1000 1000 1000 5 5000 1000 1000

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