3.3.1 - Revenue

Cards (8)

  • 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