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The equation is as follows:
TR = P * Q
The second concept is average revenue (AR), this means the amount the firm earns per unit sold.1 The equation is as follows:
AR = TR/Q
The third concept is marginal revenue (MR), this means the extra total revenue gained by selling one more unit. 1 The equation is as follows:
MR = ATR/AQ
Calculating revenue curves also depends on whether or not price is affecting the firms output. For example, a business with a relatively small market share can only produce as much as it is capable at the set price. These businesses are therefore known as price takers...
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