3.3.1 - revenue

Question 1

Formulae to calculate and understand the relationship between:
total revenue

Answer 1

Quantity x Price

Question 2

Formulae to calculate and understand the relationship between:
average revenue

Answer 2

total revenue/total output

Question 3

Formulae to calculate and understand the relationship between:
marginal revenue

Answer 3

change in total revenue/ change in output

Question 4

Price elasticity of demand and its relationship to revenue concepts (calculation required)

Answer 4

PED is perfectly elastic in perfect competition, so more quantity sold means more revenue

for firms in other market structures revenue is maximised when MR crosses the x-axis as this is the point where the extra revenue for each product becomes negative