Revenue Theory
What is revenue?
Revenue is the income derived by a firm from selling its products, over a period of time.
Total revenue (TR)
Total revenue is the total receipts of a firm from the sale of any given quantity of output.
It can be calculated as the selling price of the firm's product times the quantity sold, i.e. total revenue = price × quantity
Average revenue
Average revenue is the total revenue divided by total quantity sold.
AR=TR/Q(in units)
Marginal Revenue
Marginal revenue (MR) is the amount of extra revenue which is generated by selling one more unit of a product in a given time period.
MR=Change in TR/Change in quantity
