3.3.1 - revenue Flashcards
1
Q
Formulae to calculate and understand the relationship between:
total revenue
A
Quantity x Price
2
Q
Formulae to calculate and understand the relationship between:
average revenue
A
total revenue/total output
3
Q
Formulae to calculate and understand the relationship between:
marginal revenue
A
change in total revenue/ change in output
4
Q
Price elasticity of demand and its relationship to revenue concepts (calculation required)
A
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