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.
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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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Naeem Javid Muhammad Hassani is working as Conservator of Forests in Balochistan Forest & Wildlife Department (BFWD). He is the CEO of Tech Urdu (techurdu.net) Forestrypedia (forestrypedia.com), All Pak Notifications (allpaknotifications.com), Essayspedia, etc & their YouTube Channels). He is an Environmentalist, Blogger, YouTuber, Developer & Vlogger.