explain the relation between the total revenue and marginal revenue with the help of a revenue schedule
Answers
Answer:
Explanation:
TR = P-Q
Answer:
Explanation:
Total revenue is the amount of total sales of goods and services. It is calculated by multiplying the amount of goods and services sold by the price of the goods and services. Marginal revenue is directly related to total revenue because it measures the change in the total revenue with respect to the change in another variable.
Total revenue is important because in the effort to grow profits, businesses strive to maximize the difference between their total revenues and total costs. Understanding the subtleties of the relationship between revenues and costs distinguishes the best business managers because while increasing production leads to an increase in sales and total revenue, there is also costs involved with increasing production.
In addition, the calculation of total revenue frequently takes timetables into account. A restaurateur, for example, might tabulate the number of hamburgers sold in an hour, or the number of orders of medium-sized french fries sold throughout the business day. In the latter case, the total daily revenue would be the quantity (Q) of fries sold—say 300, multiplied by the price (P) per unit—say $2, per day. Therefore, the simple formula for this calculation would be:
\begin{aligned} &TR = Q \times P \\ &\textbf{where:}\\ &TR=\text{total revenue}\\ &Q=\text{quantity}\\ &P=\text{price}\\ \end{aligned}
TR=Q×P
where:
TR=total revenue
Q=quantity
P=price
With the values plugged in to the equation, Total revenue is $600—figured by the simple arithmetic of 300 X $2