Revenue

Question 1

Define Total Revenue
What is its formula

Answer 1

The amount of money flowing into the business through sales of goods/services

Sales x Quantity

Question 2

Define Average Revenue
What is its formula

Answer 2

The price of each good/service

(Total revenue)/output

Question 3

Define Marginal Revenue
What is its formula

Answer 3

The additional revenue a firm earns by selling one more good/service

change in total revenue/change in output

Question 4

What curve is the average revenue curve the same as

Answer 4

Demand curve

Question 5

What is the relationship between the average revenue and marginal revenue curves

Answer 5

The marginal revenue curve is twice a steep as the average revenue curve

Question 6

Go on sketchpad and draw on one curve:
AR
MR
Total revenue

Answer 6

Did you show
-MR curve crossing the axis at half the output as AR
-TR is an inverted-U shape
-TR is maximised when MR=0
-TR finishes where AR finishes