3.5 Average revenue, total revenue and profit.
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What is total revenue?
All the money received by a firm from selling its total output.
What is the equation for average revenue?
Total revenue / Output
What is average revenue?
Total revenue divided by output; in a single -product firm, average revenue equals the price of the product.
When does Demand equal average revenue?
When price charged is he same for all units of output being sold. Since Average revenue=Total revenue/Price,therefore AR=Q*P/Q= P. Therefore, AR=P
What is profit?
The difference between total sales revenue and total cost of production.
