--%>

Explain the concept of revenue

Explain the concept of revenue.

E

Expert

Verified

For the purpose of demand analysis, this is considered helpful to differentiate between different types of revenue as follows:

Average Revenue (AR):

Average Revenue means the whole receipts from sales divided with the number of unit sold.

AR= TR/Q

Total Revenue (TR):

Total Revenue means the whole sales proceeds. This can be ascertained with multiplying quantity sold through price.

TR =P x Q

Incremental Revenue (IR):

Incremental Revenue measures then differences among the new TR and existing TR

IR=R2-R1 =?R

Marginal Revenue (MR);

This is the additional revenue that would be earned by selling an additional unit of a products firm. This demonstrates the change in TR while one more or one less unit is sold.

MR= R2-R1/Q2-Q1 = ?R/?Q

Here, R1= Total Revenue before price change
R2= Total Revenue after price change
Q1 = old quantity before price change
Q2 = new quantity after price change.

   Related Questions in Managerial Economics

  • Q : Negatively sloped over wage ranges The

    The supply curve of the labor is negatively sloped over wage ranges where the: (1) the demand for leisure rises along with income. (2) leisure is an inferior good. (3) people offer more hours of labor at higher wages. (4) some people

  • Q : Describe the Long term Demand

    Describe the Long term Demand Forecasting.

  • Q : Profit Maximization in Labor Market and

    As a firm is a pure competitor in both the labor market and during the sale of its product, this will hire labor where: (w) profit is maximized. (x) marginal revenue product = marginal resource cost. (y) wage = value of the marginal product. (z) All o

  • Q : Illustrates the Law of Returns to scale

    Illustrates the Law of Returns to scale?

  • Q : Explain the reasons for demand curve

    Explain the reasons for demand curve slopes downward.

  • Q : Initially purely competitive labor

    When this purely competitive labor market is firstly into equilibrium at D0L, S0L, raise in labor productivity will result within equilibrium being attained at: (w) D0L, S0L. (x) D1L, S0L

  • Q : Determined equilibrium wage from the

    Within a purely competitive labor market, there the firm: (w) sets the wage that the household should accept. (x) should accept the wage demanded by the household. (y) and household arrive at the wage by bargaining. (z) and household should take the e

  • Q : Substitution effect of wage rate The

    The substitution effect of a small change within the wage rate dominates the income effect for that worker at each wage rate: (w) exceeding $5 per hour. (x) between $5 per hour and $24.99 per hour. (y) exceeding $25.01 per hour. (z) b

  • Q : Negatively bending Labor Supplies An

    An individual’s labor supply curve is negatively sloped that is backward-bending into a range of wages while the: (i) demand for goods exceeds the demand for leisure. (ii) worker offers more hours of labor while the wage rate in

  • Q : Determine perfectly competitive firm

    When total variable cost exceeds total revenue whatever output levels but a perfectly competitive firm: w) must produce in the short run. x) is making short-run profits. y) must shut down in the short run. z) has shel