Total Revenue-may be defined as the total receipts of (Hi firm from its sale. Total revenue is equal to total number of commodities multiplied by price per unit of commodity. Total reveue depends on the total sale. For example if a firm sells 60 of commodities at unit price Rs.20, the total revenue of the will be equal to 60 X Rs.20 – Rs.1200.

Average Revenue is the revenue per unit of the commodity it is calculated by dividing total Revenue by the number of old to the customers. For example if the total amount of 60 units of shirts is Rs.3000, the average revenue per unit list.3000 -r 60 = Rs.50.

Thus Rs.50 is the Average revenue unit sold. Here the average revenue and price per unit are equal. It should be noted that if a seller sells various units at the price, average revenue would be the same as price per unit commodity. But when different units are sold at different prices, then the Average revenue will not be equal to price.

For example if a seller sells two units of commodities at two different prices such as Rs. 12 and Rs.8, the total revenue from the sale of two units will be Rs. 20. Average Revenue will be equal to Rs.20/2 = Rs.10. Therefore, it is seen that if various units are sold at different prices, average revenue is not equal to the prices of the concerned product.

But what is seen in real life is that different units of a product are sold at the same price. In such a case price = AR. That is why in economics Average revenue is synonymous to price. The AR curve is also the same thing as the demand curve.

Marginal Revenue:

Marginal revenue at any level of firm’s output is the net revenue added to the total revenue by selling an additional unit of the product. In other words Marginal Revenue is the addition to total revenue earned by selling n units of product instead of (n-1) units. For example if a seller sells 10 units of a product at Rs.130 and if he sells by one unit more i.e. 11 units, he gets Rs. 132 as total revenue. Thus MR is Rs. 132- Rs. 130 = Rs.2. MR = TRn TR (n l). Thus the marginal revenue (MR) = the difference between the total revenue of ‘n’ units sold and the total revenue of (n-1) units.

Average revenue for first 10 units of commodity sold = Rs.130 -r 10 = Rs.13 Average revenue for 2nd 11 units of Commodity sold = Rs. 132 + 11 = Rs.12 It is found that when total output is increased by one, the average revenue (price) falls to Rs.11. Thus the total loss of revenue from 10 units is Rs. 10. Thus the net addition made to the total revenue by the 11th unit, the previous loss of Rs.10 should be deducted from price of Rs. 12 at which eleventh unit is sold. The marginal revenue in such a case is Rs. 12-10 Rs, 2.