REVENUE OF A

PRODUCER
 Revenue of a firm
• Revenue is the income that a firm has
from its normal business activities that is
the sale of goods and services to the
customers.
• Also referred to as sales or turnover.
3 terms for revenue of a producer

1.Total Revenue (TR)

2. Average Revenue(AR) and the
3. Marginal Revenue (MR) of a producer.
 TOTAL REVENUE:

• TR refers to the total sales of a firm based on a

given quantity of goods. It is the total income
of a company.
• TR= price per unit x quantity sold = PQ
• For example, if Company A produces 100
mobiles and sells them for $50 each, the total
revenue would be 100 * $50 = $5,000.
 AVERAGE REVENUE:

• AR refers to the revenue per unit of output

sold.
• AR =TR/Q = PQ/Q = P
• AR will be same as Price per unit of a
commodity for a linear revenue function.
 MARGINAL REVENUE:

• MR is the additional revenue generated from the

sale of an additional unit of output.
• It is the change in total revenue due to a unit
change in quantity sold of the product.
• So MR=ΔTR/ΔQ or dTR/dQ for a continuous
function.
• For example, if Company A sold one more
mobile and its TR revenue increased from
$5,000 to $5,060, then the marginal revenue
would be equal to $60
TR AND MR
Q1. Complete the following schedule:

Px Qx TR AR MR
10 10
9 20
8 30
7 40
6 50
5 60
4 70
TR,AR AND MR
 Ques 2.

• If demand function is given as =>

P=√(9-Q). Find the output at which TR is
maximised.
Ques 3.
• Jet airways rented Jet skies for 20 hours
per day at a rate of $50 per hour. The
following week the rentals fell to 15 hours
per day, when Jet Airways raised the price
to $55 per hour. Calculate the price and
quantity at which the revenue of Jet
Airways would be maximised for that
week.
Q Complete the following table:

Units of TR AR MR
outpu(Q)
1 10
2 18
3 24
4 28
5 30
6 30
7 28
8 24
9 18
10 10
 Link for Stock Market fundamentals:
• https://www.youtube.com/watch?v=UaWudQ
_qCQI
• https://www.youtube.com/watch?v=QcgR
oq_tqec