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
- 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)
- 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
- 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)|
The most profitable output is the point where marginal cost is equal to marginal revenue.
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|
Use the table to answer the following questions
- Complete the table by calculating the missing figures P, Q, R, S, T and U
- At what output is profit maximized
- Calculate the profit when the quantity sold is 5
- At what output does MC begins to rise
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