Revenue is a type of income which is received by the firm. It is related to Total Revenue, Average Revenue and Marginal Revenue.Total Revenue (TR) – It is total income of a firm by selling a commodity at a price. We can indicate it as:TR = PXQTR = Total RevenueP = PriceQ = Number of UnitsAverage Revenue (AR) – We can find it by dividing the Total Revenue with the number of units sold. It can be indicated as:AR = TR/QTR = Total RevenueQ = Number of UnitsMarginal Revenue (MR) – It is the addition to the Total Revenue as a result of increase in the sale of an addition unit by the firm.Relation between TR and Price Elasticity or Demand:If the price elasticity of demand for his product is relatively inelastic (Ep <1),>1), increase in price will decrease it TR.We can express via a diagramWhen Price increases and Ep is...
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