3.3.1 - Revenue

• Total revenue = quantity x Price
• Average revenue = total revenue / quantity
• Marginal revenue = change in total revenue/ change in quantity
• PED and revenue

  If PED is elastic, as price increases quantity demanded decreases by a relatively large amount and revenue decreases.
• PED and Revenue

  If PED is inelastic, as price increases quantity demanded decreases by a relatively small amount and revenue increases
• Total revenue:

  
• In markets where firms are price makers, the AR curve is downward sloping.

  
• In markets where firms are price takers, the AR curve is horizontal. This shows the perfectly elastic demand for their goods