Revenue 3.3.1 Flashcards
1
Q
Total Revenue Formula
A
P x Q
2
Q
Average Revenue Formula
A
TR/Q = P
3
Q
What is Marginal revenue
A
Additional revenue a firms makes selling one extra unit
4
Q
Marginal revenue formula
A
% Change in TR/ % Change in Q
5
Q
Why is the AR curve elastic at the top end
A
Due to higher prices a % change leads to a bigger change of price
6
Q
Why is the AR curve inelastic at the bottom end
A
Due to lower prices a % change doesnt lead to a large change in price
7
Q
Where does Revenue Maximisation occur
A
MR=0
