3.3.1 - Revenue

Question 1

What Is Revenue?

Answer 1

Money made from sales.

Question 2

What Is Total Revenue (TR) & Its Formula?
(2 Points)

Answer 2

~ The total amount of money coming into the business, through the sale of goods and services.

~ Price x Quantity.

Question 3

What Is Average Revenue (AR) & Its Formula?
(3 Points)

Answer 3

~ What a business receives on average, from each sale.

~ AR = P.

~ TR / Q.

Question 4

What Is Marginal Revenue (MR) & Its Formula?
(2 Points)

Answer 4

~ Additional revenue a firm makes, from selling one extra unit.

~ ∆TR / ∆Q.

Question 5

What Happens When Marginal Revenue Is Positive?

Answer 5

TR increases with quantity.

Question 6

What Happens When Marginal Revenue Is 0?

Answer 6

TR doesn’t change.

Question 7

What Happens When Marginal Revenue Is Negative?

Answer 7

TR decreases with quantity.

Question 8

Describe Why The Shape Of The TR Curve, Is How It Is
(3 Points)

Answer 8

~ TR increases, along as MR is positive.

~ TR is maximised when, MR = 0.

~ TR decreases, when MR is negative.

Question 9

If Demand Is Elastic, What Will An Increase In Price Mean?

Answer 9

Decreased TR.

Question 10

If Demand Is Elastic, What Will A Decrease In Price Mean?

Answer 10

Increased TR.

Question 11

If Demand Is Inelastic, What Will An Increase In Price Mean?

Answer 11

Increased TR.

Question 12

If Demand Is Inelastic, What Will A Decrease In Price Mean?

Answer 12

Decreased TR.

Question 13

When Is The Demand Curve Elastic?

Answer 13

Before MR=0.

Question 14

When Is The Demand Curve Inelastic?

Answer 14

After MR=0.

Question 15

When Is The Demand Curve Unitary Elastic?

Answer 15

When MR=0.