 ## Revenue and profit - self-test questions 1

##### Revenue definitions

Match the following definitions to the appropriate type of revenue.

 a) Price multiplied by output Choose... AR TR MR b) Total revenue divided by output Choose... AR TR MR c) The increase in total revenue from selling one more unit Choose... AR TR MR Yes, that's correct. Well done.No, that's not right. Have another go.Your answer has been saved. 2

##### Revenue calculation

A firm is selling 100 units at a price of \$25. However, to sell 110 units they need to cut the price to \$24. What is the level of marginal revenue at this higher level of sales?

 a) \$140 b) \$2640 c) \$14 d) -\$1 Please select an answerNo, that's not right. This is the extra revenue from selling the 10 extra units. The marginal cost is the cost of just one of these.No, that's not right. This is the total revenue of selling 110 units.Yes, that's correct. The marginal revenue is the difference between total revenue at 100 units (\$2500) and total revenue at 110 (\$2640) divided by ten to get the extra cost per unit.No, that's not right. This is the change in price, not the marginal revenue. 3

##### Revenue calculation

A firm is selling 100 units at a price of \$25. However, to sell 110 units they need to cut the price to \$24. What is the average revenue at 110 units?

 a) \$25 b) \$2640 c) \$14 d) \$24 Please select an answerNo, that's not right. This is the average revenue at 100 units.No, that's not right. This is the total revenue of selling 110 units.No, that's not right. This is the marginal revenue, not the average revenue.Yes, that's correct. This is the average revenue of 110 units. 