Revenue Flashcards
What is total revenue
Tells us how much money a firm receives in total from sales
Total revenue formula
Total revenue = price x quantity
What is average revenue
Tells us Wht businesses receive on average from each sale
Average revenue formula
AR =TR / Q
AR = P
What is marginal revenue
The additional revenue a firm makes selling one extra unit
What happens when MR is positive
TR increases
What happens when MR is 0
Total Revenue does not change
What happens when MR is negative
TR decreases
Marginal revenue formula
MR= change in TR / change in Q
What happens to TR when price increases and demand is elastic?
Decrease TR
What happens to TR when price decreases and demand is elastic?
TR increases
What happens to TR when price increases and demand is inelastic?
Increase TR
What happens to TR when price decreases and demand is inelastic?
Decrease in TR
Profit equation
Profit= TR-Total cost
Profit equation
Profit= TR-Total cost
