Revenue-Total revenue-Marginal revenue-Average revenue and their relationship

Revenue

The total amount of money reciepts or sales reciepts recieved by the company for goods sold or services provided during a certain time period.In words of Dooley,''The revenue of a firm is its sales reciepts from the sale of the product''

                   Thus,by selling a commodity whatever money a firm recieves is called its revenue.

1)Total revenue: The aggeregate revenue obtained by a firm from the sale of a particular quantity of output.Total revenue(TR) is calculated by multiplying the total units sold by the price per unit of the commodity 

       TR=P×Q, p=price and Q=number of units sold

2)Marginal revenue:Marginal revenue is the change in total revenue which results from the sale of an additional unit of a commodity.It is the change in total revenue on account of the sale of one more(or one less) unit of output. MR=TRn-TRn-1

3)Average Revenue: Average revenue reffers to revenue per unit of output sold.it is calculated by deviding TR and TQ

     AR=TR/TQ

Relation between Total revenue average revenue and marginal revenue

●So long as TR is increasing at constant rate,MR is constant

●When TR is increasing at diminishing rate,MR should be decreasing.

●When TR is maximum,MR is zero.

●If AR is constant MR is equal to to AR.