Revenue

Question 1

Revenue

Answer 1

• Revenue is the income from selling goods and services
• Profit X quantity sold

Question 2

Total revenue

Answer 2

The total amount of revenue from the sales of a given level of output

Question 3

Average revenue

Answer 3

• The average revenue per unit sold
• Total revenue ÷ units sold
• If all units are sold at the same price AR = price

Question 4

Marginal revenue

Answer 4

• The revenue from selling an extra unit of output
• Change in revenue ÷ extra units

Question 5

Revenue maximisation

Answer 5

• Maximising sales revenue is an alternative object to profit maximisation and occurs when the marginal revue from selling and extra unit is zero
• The condition for revenue maximisation is to product up to the point where MR = 0
• This is also the level of output where PED = 1, specifically at the mid-point of the average revenue/ demand curve