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Revenue and profit:

Revenue does not only depend on the marketing conditions under which the business operates, but also, three revenue concepts which will vary with output. The first concept is total revenue (TR), this means the firm's total earnings per period of time from the sale of a particular amount of output (Q). The equation is as follows:

TR = P * Q

The second concept is average revenue (AR), this means the amount the firm earns per unit sold.1 The equation is as follows:

AR = TR/Q

The third concept is marginal revenue (MR), this means the extra total revenue gained by selling one more unit. 1 The equation is as follows:

MR = ÄTR/ÄQ

Calculating revenue curves also depends on whether or not price is affecting the firms output. For example, a business with a relatively small market share can only produce as much as it is capable at the set price. These businesses are therefore known as price takers. Price takers AR is indicated by the......

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Approximate Word Count: 639
Approximate Pages: 3 (250 words per double-spaced page)

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