Revenue Concept SS2 Economics Lesson Note

Revenue refers to the income derived by a producer or firm from business activities or the sale of his or its products.

  TYPES OF REVENUE            

1. Total Revenue (TR):  This refers to the total income which a firm derives from the sale of its products.

Total Revenue = Price x Quantity (TR = PxQ)

2. Average Revenue(A.R):  The average revenue is the same as the price per unit of the commodity.  It is derived by dividing the total revenue by the total unit of the commodity sold.

 =   = P

3. Marginal Revenue:  This is the additional income earned by selling an extra unit of a commodity.

REVENUE SCHEDULE OF A FIRM

The most profitable output is the point where marginal cost is equal to marginal revenue.