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The theory of the firm under perfect competition — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsThe theory of the firm under perfect competition4 Marks
Question
Define $TR, AR$ and $MR$.
✓

Answer

Total revenue refers to the total amount of money received by the firm from the sale of its product. It is obtained by multiplying the price per unit of commodity with the quantity of output sold. TR = Price × Output = P × Q, Average revenue refers to revenue per unit of commodity sold. It is calculated by dividing the TR by the number of units sold.$\text{AR}=\frac{\text{TR}}{\text{No. of Units Sold}}=\text{Price}$
Marginal revenue refers to the addition made to TR when one more unit of a commodity is sold. $MR_n. = TR_n. - TR_{n─1}$

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