Average Revenue:
Total revenue divided by the number of units sold.
Marginal Revenue:
Is the extra revenue that an additional unit of product will bring. It is the additional income from selling one more unit of a good; sometimes equal to price. It can also be described as the change in total revenue ÷ the change in the number of units sold.
Relationship:
They both are the revenue brought in by, in this case, units sold. They are both used to calculate the total revenue just that marginal is any exrta revenue that the average revenue has left over.
Average revenue: The total revenue from the sale of a given output divided by the number of units sold. (AR=TR/Q) Marginal Revenue: The change in total revenue resulting from increasing sales by one unit. (MR=TR2-TR1)
what is average revenue?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Explain why the marginal revenue(MR) is always less than the average revenue (AR)?
This question reflects a fundamental misunderstanding of supply and demand. Marginal revenue and average revenue are related to a firm's cost function, and are thus connected to SUPPLY. They have nothing to do with a demand curve in classical economics, which is the marginal benefit to the CONSUMER of being in the market.
when marginal revenue equal to marginal cost,when marginal cost curve cut marginal revenue curve from the below and when price is greter than average total cost
what is average revenue?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Explain why the marginal revenue(MR) is always less than the average revenue (AR)?
This question reflects a fundamental misunderstanding of supply and demand. Marginal revenue and average revenue are related to a firm's cost function, and are thus connected to SUPPLY. They have nothing to do with a demand curve in classical economics, which is the marginal benefit to the CONSUMER of being in the market.
when marginal revenue equal to marginal cost,when marginal cost curve cut marginal revenue curve from the below and when price is greter than average total cost
I'm thinking that marginal revenue product is the marginal revenue on one product, and marginal revenue is the marginal revenue on the whole firm sales... I'm wondering the same thing but the above response is incorrect. both terms imply values on one item as indicated by the "marginal"
Total average pertains to annual revenue. While marginal revenue is equivalent to quarterly profits. The relationship between the two is only that one is the dividend of the other.
Marginal revenue is the change in total revenue over the change in output or productivity.
Average revenue is the revenue per unit of the commodity sold. Average revenue and price are the same thing. It is obtained by dividing total revenue by the number of units sold by the producer. Suppose a firm's total revenue from the sale of 100 bicycles is Rs. 1,20,000,average revenue here will be, RS.12,00(1,20,000/100). Marginal revenue ia a net addition to the total revenue when one more unit of a commodity is sold. For example,suppose a firm receives total revenue of Rs. 5,000 from the sales of 10 fans and Rs.5,480 by selling 11 fans. Here Rs. 480(5,480-5,000) will be the marginal revenue from the sale of the 11th fan. Algebrically, marginal revenue is the addition to total revenue of the firm when it sells n units of product instead of n-1 units.
A company maximizes profits when marginal revenue equals marginal costs.
No, in a monopolistic market, marginal revenue is less than average revenue and price. This is because the monopolist must lower the price in order to sell more units, leading to a decline in revenue per unit.
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.