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Revenue

Price (P) is the money cost to the consumer of a good or service sold by the producer.

Quantity (Q) is the quantity of goods or services produced by the producer and brought by the
consumer.

Revenue (R) is the income earned by firms. It is the money that…

Page 2

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Average Revenue Curve:




(2)

AR slopes downwards because prices must fall to influence an increase in quantity demanded.

Marginal Revenue Curve:




(3)

Perfectly Elastic Average Revenue and Marginal Revenue Graph




(4)

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A perfectly elastic demand curve results in a horizontal AR and MR curve. A constant price is charged
so P = AR = MR. An infinite amount of output is demanded.



Revenue and Elasticity




(5)

In the top half of the demand (or AR curve) curve, small proportionate changes in…

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Total Revenue:-

The TR curve is a bell shape; it follows the same trajectory as a ball thrown in the air.
When MR is positive, TR is rising, when MR is negative, TR is peaking.
The top of the TF curve is directly below the mid-point of the AR curve…

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(5)http://www.google.co.uk/imgres?q=total+revenue+and+elasticity+of+demand&num=10&hl=en&
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davidsalter

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This summarises all the definitions and formulae for revenue. It also includes graphs.

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