Revenue is income earned by a firm from the sale of its output.

Revenue of the firm can be looked at in three ways;-

Total revenue (T.R): This is the total amount of money received by the firm as a result of selling its total output produced per period of time. Therefore, total revenue is obtained by multiplying the total quantity of output sold by the per unit price at which quantity is sold.

Hence TR = PXQ

Where, TR, Total revenue

P - Per unit Price

Q- Quantity of output sold.

Average revenue (AR): This refers to revenue accruing to a firm per unit output. It is the same as the average price and it is simply obtained by dividing the total revenue by the total output ( quantity)

Thus, AR = TR

Q

Where , AR- Average revenue

TR - Total revenue sold.

Marginal revenue (MR): Is the additional revenue resulting from selling an extra unit of output.

MR= êTR

ê Q

Where, MR = Marginal revenue

êT.R = Change in total revenue

êQ = change in total output sold.