Sales revenue

Question 1

What are the 3 types of sales revenue

Answer 1

Total revenue
Average revenue
Marginal revenue

Question 2

Define total revenue

Answer 2

The sales revenue from all units sold

Question 3

Define average revenue

Answer 3

The sales revenue from the average unit sold

Question 4

Define marginal revenue

Answer 4

The additional total revenue from selling 1 more unit of output

Question 5

Explain the revenue curves for a monopoly

Answer 5

1. The AR curve is the same as the demand curve for the whole industry because if there’s 1 firm, that firm is the industry
2. The MR is less than the AR
3. The MR curve is twice as steep

Question 6

Explain the AR and MR curves for a firm in perfect competition

Answer 6

Firm:
1. Regular demand and supply supply

Industry:
1. Horizontal line as the firm is so insignificant that changes in output don’t affect the market price
2. AR = MR