Concept of Revenue and its different types Total, Average and Marginal Revenue

In this article we will discuss about Concept of Revenue and its different types Total, Average and Marginal Revenue.


Revenue

The term revenue means the profit or income generated from the sales of different goods at different prices.

REVENUE = COST + PROFIT

According to DOOLEY, “The revenue of a firm is its sales, receipts or income”.

There are different types of revenue i.e. Total revenue, Marginal revenue and Average revenue.

Total Revenue

Total revenue means the total income received from the selling of different goods and different prices.

Calculation of Total revenue

TR = AR x Q

Where,

TR = Total revenue

AR = Average revenue

Q = Output

Let we will discuss through example, If the price of x commodity is 10 and the person sold 5 units , so total revenue is

TR = 10 x 5

TR = 50

According to Dooley, “Total revenue is the sum of all sales, receipts or income of a firm”.

According to Clower and Due, “it is a product planned sales and expected selling price”.

According to Stonier and Hague, “Total revenue at any output is equal to price per unit multiplied by quantity sold”.

Average Revenue

Average revenue refers to the revenue obtained by the seller by selling of commodity per unit.

AR = TR

Q

Where,

AR = Average revenue

TR = Total revenue

Q = Output

According to MC Doonell, “Average revenue is the per unit revenue received from the sale of one unit of a commodity”.

Marginal Revenue

Marginal revenue refers to the net revenue received from the sales of additional unit of commodity.

MR = ∆TR/∆Q

According to Ferguson, “Marginal revenue is the change in total revenue which results from the sale of one more or one less unit of output.”

According to A. Koutsoyiannis, “The marginal revenue is the change in total revenue resulting from selling an additional unit of the commodity.”

So we will discuss Concept of Revenue and its different types Total, Average and Marginal Revenue. For any query comment below

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