State the meaning of average revenue and marginal revenue
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Meaning of average revenue and marginal revenue of a firm. TOTAL REVENUE :- Total revenue is the total amount of money which is derived by multiplying the number of units sold by the price per unit.For example one firm sells 1 pens in market and the price per pen is Rs.
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MARGINAL REVENUE :- Marginal revenue is the net revenue earned by selling the last unit of production. Suppose a firm gets Rs. 100/- by selling ten books. Sale increases from ten to eleven units and total revenue increases from 100 to 109. The addition of Rs. 9/- is known as marginal revenue.
AVERAGE REVENUE :- It is found by dividing total revenue by the number of units sold. For example, a firm sells 100 hats, for Rs. 1000/- then the average revenue will be 1000/100 = Rs. 10. Average revenue represents the average sale price per unit of commodity. We may also say that AR = Price.