Flashcards in Total Revenue 8.2-1 Deck (12)
What is total revenue?
The price of a good or service multiplied by the quantity sold.
Curve of a Total Revenue graph:
Is not curved. It is called a 'smooth' curve.
Total Revenue Curve shows you:
That for any given quantity of the product sold in a period, how much total revenue the firm earns.
Slope of the TR curve:
Rise over the run. Slope of TR = the priceT of the product.
What is the TR formula?
PxQ = TR
Consider a total revenue table for a firm that makes tv sets:
If price is $500 and they sell 1 tv, $500 x 1 = $500. Therefore, TR = $500.
Total Revenue slope:
Is equal to the price of the product for a perfectly competitive firm.
If you plot each revenue quantity combination:
You can get a Total Revenue Curve.
When you have a collection of points:
You should connect them so they can form a curve.
What would it mean to talk about selling one and a half tv sets a week?
It would really just mean that you are selling 3 tv sets every 2 weeks.
Does it make sense to think about the possibility of fractional tv sets sold?
Yes. Refer to the above Q&A.