3.3.1 Revenue
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Economics theme 3 (paper 2)
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6 Terms
Total Revenue (TR)
The total value of all sales a firm incurs, calculated as Selling price (P) x Quantity sold (Q).
Average Revenue (AR)
The overall revenue per unit, calculated as Total Revenue (TR) / Quantity (Q).
Marginal Revenue (MR)
Extra revenue received from the sale of an additional unit of output, calculated as Change in Total Revenue (TR) / change in Quantity (Q).
Perfect competition
A market structure characterized by a complete absence of rivalry among the individual firms.
Imperfect competition
A market structure where firms have some control over the price of their products.
PED and Total Revenue
The total revenue rule states that in order to maximise revenue, firms should increase the price of products that are inelastic in demand and decrease prices on products that are elastic in demand.
Note 
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