- TOTAL REVENUE (TR): This refers to the total income which a firm derives from the sale of its products.
Total Revenue = Price x Quantity (TR = PxQ)
- AVERAGE REVENUE (A.R): The average revenue is the same as the price per unit of the commodity. It is derived by dividing the total revenue by the total unit of the commodity sold.
REVENUE SCHEDULE OF A FIRM
| Quantity sold (Output) | Total revenue (N) | Average Revenue (Unit Price) N | Napinal Revenue (N) |
| 0 | 0 | 0 | – |
| 1 | 400 | 400 | 400 |
| 2 | 700 | 350 | 300 |
| 3 | 900 | 300 | 200 |
| 4 | 1040 | 260 | 140 |
| 5 | 1150 | 230 | 110 |
| 6 | 1200 | 200 | 50 |
The most profitable output is the point where marginal cost is equal to marginal revenue.
ASSIGNMENT
TABLE OF A FIRM OF REVENUE AND COST
| Quantity of yams (kg) | Total Revenue (TR) N | Marginal Revenue (ML) N | Total Cost (TC) N | Marginal Cost (MC) N |
| 0 | 0 | – | 5 | – |
| 1 | 9 | 9 | 8 | 3 |
| 2 | 18 | 9 | 10 | 1 |
| 3 | 24 | 6 | 21 | 5 |
| 4 | 28 | Q | 25 | 4 |
| 5 | 30 | 2 | 25 | U |
| 6 | P | 1 | 25 | O |
| 7 | 28 | -3 | 25 | 1 |
| 8 | 24 | R | 24 | -2 |
Use the table to answer the following questions
- Complete the table by calculating the missing figures P, Q, R, S, T and U
- At what output is profit maximized
- Calculate the profit when the quantity sold is 5
- At what output does MC begins to rise
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