Average Revenue:
Average revenue is the revenue earned per unit of output. It is nothing but price of one unit of output because price is always per unit of a commodity. For this reason, average revenue curve is also the firms demand curve. Symbolically, average revenue is:
AR = TR/Q
Where AR is average revenue TR is the total revenue
Q is quantity of a commodity sold
Or AR = P*Q/Q
Or AR = P
If, for example, a firm realises total revenue of ` 1,000 by the sale of 100 units, it implies that the average revenue is ` 10 (1,000/100) or the firm has sold the commodity at a price of ` 10 per unit.
AR = TR/Q
Where AR is average revenue TR is the total revenue
Q is quantity of a commodity sold
Or AR = P*Q/Q
Or AR = P
If, for example, a firm realises total revenue of ` 1,000 by the sale of 100 units, it implies that the average revenue is ` 10 (1,000/100) or the firm has sold the commodity at a price of ` 10 per unit.
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