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Production and cost — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsProduction and cost2 Marks
Question
Why is Average Revenue always equal to price?
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Answer

Average Revenue is the per unit revenue (price) received from the sale of one unit of a commodity. With the help of following equation, we can prove AR = P.

As we know, $\text{AR}=\frac{\text{TR}}{\text{Q}}\dots\text{(i)}$

$\text{TR}=\text{P}\times\text{Q}\dots\text{(i)}$

(Here, P = Price, Q = Quantity of output sold)

Thus, $\text{AR}=\frac{\text{P}\times\text{Q}}{\text{Q}}$ [from equation (i) and (ii)]

Hence, it is proved that, AR = Price.

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