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
• AR = price and the curve is the same as the demand curve

Question 4

Define marginal revenue

Answer 4

The additional total revenue from selling 1 more unit of output

Question 5

What are the revenue curves (revenue/quantity) for a firm in perfect competition

Answer 5

Marginal revenue = average revenue = demand and they are constant because firms are price takers

Total revenue is straight line through origin as MR is constant

Question 6

What are the revenue curves (revenue/quantity) for a firm in imperfect competition

Answer 6

AR = demand and slopes downwards as firms are price makers

MR also slopes downwards but with 2x gradient

TR is a curve which increases until a max point when MR=0 and then decreases (looks a bit like TP curve)