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1. Submitted By
Utkarsh Goyal
Submitted To
Abhilasha Dixit

2. Revenue
Revenue is the amount of money that a company actually receives
during a specific period, including discounts and deductions for
returned merchandise. It is the "top line" or "gross income" figure
from which costs are subtracted to determine net income.
It consists of following three types.
Revenue
Total Revenue
Average
Revenue
Marginal
Revenue

3. Concept of Revenue
Total Revenue => Total Revenue refers to total receipts from the sale of
a given quantity of a commodity. It is the total income of a firm. Total
revenue is obtained by multiplying the quantity of the commodity sold
with the price of the commodity.
Total Revenue = Quantity × Price
Average Revenue => Average revenue refers to the revenue obtained by
the seller by selling the per unit commodity.
It is obtained by dividing the total revenue by total output.
Average Revenue = Total Revenue/Quantity
AR refers to the rate at which output is sold. Accordingly AR is nothing
but price of the product.

4. Marginal Revenue => Marginal revenue is the net revenue obtained by
selling an additional unit of the commodity. It is the addition made to the
total revenue by selling one more unit of the good. In algebraic terms,
marginal revenue is the net addition to the total revenue by selling n units of
a commodity instead of n – 1.
Change in Total Revenue TR
Change in Quantity Sold TQ
MR = =

5. Example: Imperfect competition
Output
Q
Average
Revenue
(Price)
Total Revenue
TR = AR X Q
Marginal Revenue
MR =TR(n) - TR(n-1)
1 10 10 -
2 9 18 8
3 8 24 6
4 7 28 4
5 6 30 2
6 5 30 0
7 4 28 -2
8 3 24 -4
9 2 18 -6
10 1 10 -8

6. Relationship between Total, Average and Marginal Revenue.
Imperfect competition
-10
-5
0
5
10
15
1 2 3 4 5 6 7 8 9 10
AR
MR
0
10
20
30
40
1 2 3 4 5 6 7 8 9 10
TR
P
R
I
C
E
P
R
I
C
E

7. Example: Perfect competition
Output
Q
Average
Revenue
(Price)
Total Revenue
TR = AR X Q
Marginal Revenue
MR =TR(n) - TR(n-
1)
1 10 10 -
2 10 20 10
3 10 30 10
4 10 40 10
5 10 50 10
6 10 60 10
7 10 70 10
8 10 80 10
9 10 90 10
10 10 100 10

8. Relationship between Total, Average and Marginal Revenue.
Perfect competition
0
2
4
6
8
10
12
1 2 3 4 5 6 7 8 9 10
AR
MR
0
20
40
60
80
100
120
1 2 3 4 5 6 7 8 9 10
TR
P
R
I
C
E
P
R
I
C
E