Microeconomics Assignment Help >> Theory of Revenue, Total Revenue, Marginal Revenue, Average Revenue

Theory of Revenue

Revenue is defined as the aggregate amount of cash obtained by the organization by selling goods and providing services for the duration of a particular time span. Revenue Analysis is further categorized into types which have described below:

Total Revenue (TR)

Total Revenue signifies the total amount a company obtains by carrying out product sales and offering services. Further, TR can be calculated by any of the two ways mentioned below:

First method;

TR = Q * AR (Price)

Where,

TR = Total Revenue

Q = Units of Quantity

AR = Average Revenue

Second method;

TR = ∑MR

Where,

TR = Total Revenue

MR = Marginal Revenue

Marginal Revenue (MR)

Marginal Revenue is defined as the change in TR resulting from per unit augment in the sales.

MR = TRn-1

Where,

MR = Marginal Revenue

TR = Total Revenue

Average Revenue (AR)

AR = TR/Q

Where,

AR = Average Revenue

TR = Total Revenue

Q = Quantity sold