Meaning Of Revenue Cost Concept: Types And Concept Of Revenue

Economics

Meaning Of Revenue Concept

Revenue means the income earned by a company from the sale of it commodities/goods. While in the government cases, it is taxes of and incomes from other sources.

The concept used under revenue are as follows:

1. Marginal Revenue (MR): This refers to increase in total revenue as a result of selling one more unit of a product.

2. Total Revenue (TR): This is the total amount of income earned from the sale of a specified unit of product. It is calculated as: TR = AR x Q.sold.

3. Average Revenue (AR): This is equilvalent to the unit of price of a product. It is calculated as: AR = TR.

Profit is the excess of revenue over cost of profit. I.e loss. Profit is usually calculated as profit = TR – TC

(AR x Q) – (TFC + TVC)

= Price x Q – (ATC x Q).

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