This document discusses concepts related to revenue. It defines total revenue as the sum total of money received from sales of output. Total revenue equals price multiplied by quantity. Marginal revenue is the change in total revenue from selling one more unit, and is calculated as the change in total revenue divided by the change in quantity. Average revenue is total revenue divided by quantity. Tables and graphs are presented showing the relationships between total revenue, marginal revenue, and average revenue as quantity changes. It is noted that total revenue increases at a diminishing rate as marginal revenue declines.

1. CONCEPT OF REVENUE
PRESENTED BY
RAJA RAM SHARMA

2. MEANING OF REVENUE
Revenue of a firm is its money receipts from the sale of its product in a
given period.
Revenue = Price X Product
Revenue = Cost + Profit
Profit = Revenue – Cost

3. CONCEPT OF REVENUE
Total Revenue – Sum total of money received of a firm from the sale of a
given output.
𝑻𝒐𝒕𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 = 𝑷𝒓𝒊𝒄𝒆 𝑿 𝑷𝒓𝒐𝒅𝒖𝒄𝒕
Marginal Revenue – Change in total revenue by selling of one more unit of
a commodity.
𝑴𝑹 = 𝑻𝑹𝒏 − 𝑻𝑹𝒏 − 𝟏
𝑴𝑹 = ∆𝑻𝑹/∆𝑸
Average Revenue – Revenue per unit of output is called average revenue.
𝑨𝑹 =
𝑻𝑹
𝑸

4. TR, MR AND AR SCHEDULE
Price Units of output TR AR MR
10 1 10 10 10
9 2 18 9 8
8 3 27 8 6
7 4 28 7 4
6 5 30 6 2
5 6 30 5 0
4 7 28 4 -2
3 8 24 3 -4

5. GRAPHICAL PRESENTATION
-10
-5
0
5
10
15
20
25
30
35
0 1 2 3 4 5 6 7 8 9

6. RELATIONSHIP BETWEEN MR AND TR
Relation between MR and TR
MR can be zero or even negative, but only when price is declining as under
monopoly or monopolistic competition.
TR stops increasing when MR = 0, so that TR is maximum when MR = 0.
TR starts declining when MR is negative.
When MR is declining, less and less is added to TR for every additional unit
sold. Accordingly TR increases only at a diminishing rate.

7. RELATIONSHIP BETWEEN TR & MR
(WHEN MORE CAN BE SOLD AT SAME PRICE)
Units sold TR AR MR
1 10 10 10
2 20 10 10
3 30 10 10
4 40 10 10
5 50 10 10

8. 0
10
20
30
40
50
60
0 1 2 3 4 5 6
TR/AR/MR
UNITS SOLD

9. RELATIONSHIP BETWEEN TR & MR
(i) TR increases at a constant rate since price is constant and MR is also
constant. This implies that TR increases at constant rate. Consequently
TR curve is upward rising straight line.
(ii) AR = Price = MR are parallel to X-axis.
(iii) Since TR increases at a constant rate, MR is also constant throughout.

10. DEMAND CURVE IN DIFFERENT MARKETS
0
5
10
15
20
25
0 1 2 3 4 5 6 7 8
REVENUE
UNITS SOLD