B2.01.02: Revenue Flashcards
1
Q
Define revenue
A
Total sales earnings in a period (R = P x Q).
2
Q
Define average revenue.
A
Revenue per unit sold (AR = P = TR / Q).
3
Q
What is marginal revenue and why is it important?
A
Additional revenue from one extra unit sold (Change in TR / Change in Q).
It guides production decisions by showing the revenue increase from selling a little more or less.
4
Q
Describe the Law of Marginal Revenue.
A
Total revenue is maximized when marginal revenue equals 0.
5
Q
How would I plot the values for a marginal revenue curve?
A
- Plot the values in between the x-value intervals
6
Q
Define toatl revenue
A
Total value of all sales earnings a firm receives in a given time period at various set prices
7
Q
What is the revenue maximising level of output?
A
- The poitn at which after that, revenue is negative hence an economic loss is incurred
