*Y, ‘The Revenue of tis also called sale py 4 firm is its sale receipts or mone i y receipts from the roceeds, re z Revenue, (3) Average Revenue Average Revenue AR_ Aga given quantity of product is called Total Revenue. If 100 45. 50 per slab, total revenue (TR) of the firm will be of all sales receipts or income of a firm.” e which results from the sale of one mote or less unit ige in total revenue which results from the sale of er change in total revenue (ATR) is divided by d out by deducting from the total revenue of 1!nue, A = Change in, TR = Total Revenue, Q = Product, TR, = Total n-1 = Total revenue of n-] Product.) al revenue (on account of the sale of one more unit) is Rs. 100 whichis 10 = Rs. 1100 — Rs. 1000 = Rs. 100. Ss (o-1) ‘unit of output sold. If, TR = Rs. 1000, and Q = 100, then outputis sold. Whatis rate? Definitely it is the price. Accordingly is the per unit revenue received from the sale of a is the number of units sold.) t competition. We have studied that a firm under e known that price = AR. Thus, we can write that ithe commodity ata given price, oratthe given AR. Rs. 10. It implies that the firm can sell 10, 20, 30,3e more unit of output is sold tant), then (AR being equal to MR), MR should also nto TR when an additional unit of output is.Marginal Revenue MR = = sae 10- ~y = 10) 19 - a UB MAR is declining by 1. This proves 1 B end deciines faster than AR So that adding lews and less to TR for every additional unit Marginal Revenue TR is maximum when MK = 0109 n is added to TR for every additional unit sold. ‘only at a diminishing rate, lations between Total Revenue, Average arginal Revenue TAS Maximum B eee ei REVENUE & ° REVENUEze10, as is shown in Fig. 1 (B) by point M, then total: B in Fig. 1 (A). This figure also shows that when both averag, marginal revenue is less than average revenue. Marginal agative but average revenue is always positive. Finally, reduced TR : touches X-axis or becomes zero. However, this is not possible Total, Average and Marginal Revenue arginal revenues of a firm have the following main relations: MR are calculated from Total Revenue: Both average and margina, revenue. It is evident from the following table: by multiplying either average or marginal revenue by [Rx Q. This relation is found under condition of Perfect Average Revenue | Marginal Revenue (Rs.) (Rs.) 5 5 5 5 L 5of a firm. Fig. 2(B) shows average and marginal revenue ‘curve is an upward sloping straight line. Sale of each unit of rate. In Fig. 2(B) PP line represents average and marginal revenue is gqual to marginal revenue (AR = MR). Revel ane AN ine hae (MR) curve are shown as straight lines. In this situation 2 and OY-axis. Itimplies that AB = BC. This situation relates ation like this, relationship between total revenue (TR), is made clear with the help of Fig. 4. Itis shown in Fig. REVENUE N MR Q OUTPUTAR = average revenue; Q = marginal revenue; © = sign of nue and Marginal Revenue In Fig. 5, average revenue curve and shown as convex to the point of y point on average revenue curve is situated at less than the mid curve will be nearer to i.e., AB is less than BC. and Marginal Revenue que and marginal revenue to the point of origin. In this sect any perpendicular 10 OY-axis, ata point farther Revenue and Marginal nd: In case of monopoly, es slope downward. revenue with of demand is Figure 5 REVENUE REVENUE we MR OUTPUT13 will Beno change + Price elasticity of elements, namely, average revenue, marginal revenue and he third element wit A th the help of the following formula: PRICE (RS.) Figure 8 uch Me iictid cave InAs PSA and ORS; rs (Sea ek oe a. K pA re Ql ory f re PH