Class 11 Microeconomics Revenue Concepts
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Questions and Answers

What does revenue refer to in economics?

  • The amount received by the firm from selling a commodity (correct)
  • The total cost of production for a firm
  • The profit earned by a firm from selling a commodity
  • The investment made by a firm in producing a commodity

    • How is Total Revenue calculated for a producer?

  • TR = Price x Quantity (correct)
  • TR = Profit + Cost
  • TR = Average Revenue x Quantity
  • TR = Marginal Revenue x Quantity

    • What does Marginal Revenue represent?

  • The revenue earned from all units of output sold
  • The average revenue per unit of output sold
  • The additional revenue from selling one more unit of output (correct)
  • The total revenue divided by the quantity of output sold

    • In a perfect market, what relationship exists between Average Revenue (AR) and Marginal Revenue (MR)?

    <p>AR = MR</p> Signup and view all the answers

    How is Average Revenue calculated?

    <p>AR = Price x Quantity</p> Signup and view all the answers

    What happens to Average Revenue and Marginal Revenue when the price is constant in a perfect market?

    <p>AR = MR</p> Signup and view all the answers

    What happens to Marginal Revenue (MR) when Total Revenue (TR) increases at a decreasing rate?

    <p>MR decreases</p> Signup and view all the answers

    What is the relationship between Average Revenue (AR) and Marginal Revenue (MR) when AR is constant?

    <p>MR is constant</p> Signup and view all the answers

    What is the condition for MR to be zero in relation to TR?

    <p>When TR is maximum</p> Signup and view all the answers

    What can be said about the rate of decrease in Average Revenue (AR) compared to the rate of decrease in Marginal Revenue (MR)?

    <p>Rate of decrease in AR is less, rate of decrease in MR is more</p> Signup and view all the answers

    What happens to Marginal Revenue (MR) when Total Revenue (TR) declines?

    <p>MR becomes negative</p> Signup and view all the answers

    What relationship between price and demand is highlighted in the text?

    <p>They are negatively related</p> Signup and view all the answers

    In an imperfect market, what should a producer do to increase revenue?

    <p>Decrease the price</p> Signup and view all the answers

    What happens to Total Revenue when the price of a commodity decreases?

    <p>Total Revenue increases at a diminishing rate</p> Signup and view all the answers

    What does TR stand for in the provided table?

    <p>Total Revenue</p> Signup and view all the answers

    In the given scenario, what does AR always equal to?

    <p>Price</p> Signup and view all the answers

    How do both AR and MR react when the price of a commodity decreases?

    <p>Both AR and MR decrease</p> Signup and view all the answers

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