Theory Of Revenue Flashcards
What is revenue in economics?
Revenue is the income generated from the sale of goods or services.
Define total revenue.
Total revenue is the total income received from selling a certain quantity of goods or services.
How is total revenue calculated?
Total revenue is calculated by multiplying the price per unit by the quantity sold.
What is marginal revenue?
Marginal revenue is the additional revenue gained from selling one more unit of a good or service.
True or False: Marginal revenue can be negative.
True.
What happens to total revenue when marginal revenue is positive?
Total revenue increases when marginal revenue is positive.
What is average revenue?
Average revenue is the revenue earned per unit of output sold.
How is average revenue calculated?
Average revenue is calculated by dividing total revenue by the quantity sold.
True or False: Average revenue is equal to price in a perfectly competitive market.
True.
What is the relationship between price and marginal revenue in a monopolistic market?
In a monopolistic market, marginal revenue is less than price.
What is the formula for calculating total revenue?
Total Revenue = Price × Quantity.
What does it mean if total revenue is inelastic?
If total revenue is inelastic, a decrease in price leads to a decrease in total revenue.
Fill in the blank: When demand is elastic, lowering the price will ______ total revenue.
increase.
What is the shape of the total revenue curve in a monopolistic market?
The total revenue curve is typically upward sloping initially and then peaks before declining.
True or False: In perfect competition, firms can influence market price.
False.
