Published by: sadikshya

Published date: 02 Jul 2021

Introduction of Revenue refers to the payment received by an entrepreneur from the sales of goods produced. If a producer can during a month sales 100 package of pens at the price of Rs 10 each, this total revenue during the month equal Rs 100*10= Rs 1000. According to Dooley, the revenue of a firm is its sale receipt or money receipts from the sales of a product, thus money receipts by a producer for selling the products are called revenue.

There are three types of revenue they are as follows.

**Total revenue (TR).****Average revenue (AR).****Marginal revenue (MR).**

**Total revenue (TR)**

TR is the total amount of money received by the firm from the sales of the total product. It can b calculate by multiplying the units of the sales with the price. In other words, it is the sum of the MR. It is expressed as follows.

TR=P*Q

Where,

TR= Total revenue

Q= Quantity sold

P= Price per unit of commodity

**For example,**

Q=5, P= Rs 10

Then TR= 5*10= Rs 50.

**Average revenue (AR)**

The AR is the price per unit. It can be obtained by dividing the TR by the quantity sold. It can be expressed as follows.

AR=TR/Q

Where,

AR= Average revenue

TR= Total revenue

Q= Quantity sold

**For example,**

TR= Rs 80 and Q= 2

AR= 80/2= Rs 40

**Marginal revenue (MR)**

Marginal revenue is the additional revenue made by TR while selling one more unit of a commodity. It is expressed as follows.

MR= TRn-TRn-1

Where,

MR= Marginal revenue

TRn= Total revenue of n units

TRn-1= Total revenue of n-1 units

**for example,**

TRn=10

TRn-1=14

The MR= 10-14=4.