## Concept of Revenue:

**revenue**. The profit earned by the firm is the difference between the revenue and the cost of production.

According to

**Dooley,”**

*The revenue of a firm is its sales receipt from the sale of a product.”*

There are three types of revenue which can be explained as follows:

Total revenue is the total amount of money received by a firm from the sales of a given quantity of product. Technically, total revenue is the sum of marginal revenues. Mathematically, total revenue is the product of price and quantity sold.

Symbolically;

**Total revenue (TR)**

Total revenue is the total amount of money received by a firm from the sales of a given quantity of product. Technically, total revenue is the sum of marginal revenues. Mathematically, total revenue is the product of price and quantity sold.**Total revenue (TR)**Symbolically;

**TR=∑MR****or**

**TR=P×Q**

**Where,**

**TR= Total Revenue**

**∑MR= Sum of Marginal Revenues**

**P=price per unit**

**Q= Quantity sold**

**Average revenue (AR) **

Average revenue is the price per unit. Average revenue is obtained by dividing the total revenue by the total number of quantities sold.**Average revenue (AR)**Symbolically;

**AR=TR**

**/**

**Q**

**Where,**

**AR= Average Revenue**

**TR= Total revenue**

**Q= Quantity sold**

**Marginal Revenue(MR)**

Marginal revenue is the addition to the total revenue from the sales of an additional unit of a commodity. Marginal revenue is obtained by dividing change in total revenue by the change in quantity sold.**Marginal Revenue(MR)**Symbolically,

**MR= ∆TR / ∆Q**

**Where,**

∆TR =Change in TR

∆Q= Change in quantity sold

OR

**MR=TR**

_{n}-TR_{n-1}Where,

TR

_{n = }Current Total Revenue

TR

_{n-1 = }Initial Total Revenue

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