3.5 Average revenue, total revenue and profit Flashcards
1
Q
Define total revenue.
A
All the money received by a firm from selling its total output. Selling one more unit of output usually causes revenue to rise.
2
Q
Define average revenue.
A
At any level of output, average revenue is calculated by dividing total revenue by the size of output.
3
Q
What is the difference between revenue and profit?
A
Revenue : all money earned by a firm from selling output.
Profit : all money earned by a firm from selling output, minus the costs of producing/ selling output.
4
Q
How do you calculate profit?
A
PROFIT = REVENUE - TOTAL COSTS
