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Read this article to learn about the meaning and concept of revenue,
micro economics!
Meaning of Revenue:
The amount of money that a producer receives in exchange for the sale proceeds is
known as revenue. For example, if a firm gets Rs. 16,000 from sale of 100 chairs,
then the amount of Rs. 16,000 is known as revenue.
Revenue refers to the amount received by a firm from the sale of a given quantity of a
commodity in the market.
Concept of Revenue:
The concept of revenue consists of three important terms; Total Revenue, Average
Revenue and Marginal Revenue.
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AR = TR/Quantity …… (2)
AR = Price
MRn = TRn-TRn-1
Where:
Let us understand this with the help of an example: If the total revenue realised from
sale of 10 chairs is Rs. 1,600 and that from sale of 14 chairs is Rs. 2,200, then the
marginal revenue will be:
TR is summation of MR:
Total Revenue can also be calculated as the sum of marginal revenues of all the units
sold.
The concepts of TR, AR and MR can be better explained through Table 7.1.
6 5 30 = 6 x 5 =30 + 6 0 =30-30
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