3.3.1 Revenue

• Marginal Revenue measures the additional income from selling one more unit.
• What does Average Revenue represent in business terms?

  Revenue per unit sold
• The formula for Marginal Revenue is $MR =$$\frac{\Delta TR}{\Delta Q}$, where $\Delta Q$ represents the change in quantity
• If a company sells 100 units for $500, the Average Revenue is $5.
• When demand is price elastic, a small price increase leads to a larger decrease in quantity
• What happens to Total Revenue when demand is price inelastic and the price increases?

  Increases
• Revenue is the total income a firm earns from the sale of goods or services.
• How is revenue calculated?

  Price × Quantity
• Revenue indicates market size by reflecting total sales volume
• Revenue influences a firm's ability to cover costs and make a profit.
• What is revenue defined as?

  Total income from sales
• Total revenue indicates a firm's market size and sales performance.
• Total revenue informs business decisions on pricing and production
• Match the importance of total revenue with its description:

  Market size ↔️ Indicates the total sales

  Cost coverage ↔️ Affects ability to cover costs

  Business decisions ↔️ Informs pricing and production
• How is total revenue (TR) calculated?

  $TR =$$P × Q$
• Average revenue is calculated by dividing total revenue by quantity sold.
• Marginal revenue is the additional revenue from selling one more unit
• Match the type of revenue with its formula and description:

  Total Revenue (TR) ↔️ $TR =$$P × Q$ ||| Total earnings from sales

  Average Revenue (AR) ↔️ $AR =$$\frac{TR}{Q}$ ||| Revenue per unit sold

  Marginal Revenue (MR) ↔️ $MR =$$\frac{\Delta TR}{\Delta Q}$ ||| Additional revenue from selling one more unit
• What are three reasons why understanding revenue is crucial for a firm?

  Market size, cost coverage, business decisions
• Marginal revenue is the additional revenue from selling one more unit.
• What does market size reflect in business terms?

  Total sales volume
• Cost coverage affects a firm's ability to meet its expenses
• Business decisions guide pricing and production levels.
• What is Total Revenue (TR)?

  Total earnings from sales
• Average Revenue (AR) is the revenue per unit sold
• What is Marginal Revenue (MR)?

  Additional revenue from one more unit
• The formula for Total Revenue is $TR =$$P × Q$.
• What does the variable Q represent in the Total Revenue formula?

  Quantity sold
• The formula for Average Revenue (AR) is AR = \frac{TR}{Q}</latex>, where Q represents the quantity
• What is the formula for Marginal Revenue (MR)?

  $MR =$$\frac{\Delta TR}{\Delta Q}$
• Steps to calculate Total Revenue, Average Revenue, and Marginal Revenue in sequence.

  1️⃣ Calculate Total Revenue (TR) using the formula $TR =$$P × Q$

  2️⃣ Calculate Average Revenue (AR) using the formula $AR =$$\frac{TR}{Q}$

  3️⃣ Calculate Marginal Revenue (MR) using the formula $MR =$$\frac{\Delta TR}{\Delta Q}$
• If selling one more unit increases Total Revenue by $4, the Marginal Revenue is $4.
• How is Total Revenue calculated?

  Price × Quantity
• The formula for Total Revenue is $TR =$$P × Q$, where P represents the price
• What is the formula for Average Revenue (AR)?

  AR = \frac{TR}{Q}</latex>
• What is the formula for Total Revenue (TR)?

  $TR =$$P × Q$
• The Average Revenue (AR) is equal to the price
• How is Marginal Revenue (MR) calculated?

  $MR =$$\frac{\Delta TR}{\Delta Q}$
• Total income from sales is referred to as Total Revenue
• Match the type of revenue with its formula:

  Total Revenue ↔️ $TR =$$P × Q$

  Average Revenue ↔️ $AR =$$\frac{TR}{Q}$

  Marginal Revenue ↔️ $MR =$$\frac{\Delta TR}{\Delta Q}$