# REVENUE CONCEPT

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

## TYPES OF REVENUE

1. TOTA 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)

1. 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

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

## REVENUE SCHEDULE OF A FIRM

 Quantity sold (Output) Total revenue (N) Average Revenue (Unit Price) N Napinal Revenue (N) 0 0 0 – 1 400 400 400 2 700 350 300 3 900 300 200 4 1040 260 140 5 1150 230 110 6 1200 200 50

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

ASSIGNMENT

## TABLE OF A FIRM OF REVENUE AND COST

 Quantity of yams (kg) Total Revenue (TR) N Marginal Revenue (ML) N Total Cost (TC) N Marginal Cost (MC) N 0 0 – 5 – 1 9 9 8 3 2 18 9 10 1 3 24 6 21 5 4 28 Q 25 4 5 30 2 25 U 6 P 1 25 O 7 28 -3 25 1 8 24 R 24 -2

Use the table to answer the following questions

1. Complete the table by calculating the missing figures P, Q, R, S, T and U
2. At what output is profit maximized
3. Calculate the profit when the quantity sold is 5
4. At what output does MC begins to rise

COST CONCEPT

PRODUCTION POSSBILITY CURVE

ECONOMIC REFORM PROGRAMS | EFCC, ICPC, NAFDAC & SON

CURRENT ECONOMIC PLANS | MDGs, NEEDS & VISION 2020 (GOALS, VISIONS & OBJECTIVES)

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