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Study Notes

Business Revenues

A-Level, IB
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 16 Feb 2019

Business revenue is the income from selling goods and services in markets

Revision Video: Maximising Total Revenue

Revision Video - Maximising total revenue

Summary of key definitions

  • Average revenue: Price per unit = TR/Q
  • Marginal revenue: Change in total revenue from selling the extra unit
  • Price elastic demand: When coefficient of PED > 1
  • Price elasticity of demand: % change in demand for X divided by % change in price of X
  • Price inelastic demand: When coefficient of PED < 1
  • Price maker: A firm with pricing power because AR curve is downward sloping
  • Price taker: Associated with perfect competition, where AR=MR
  • Total revenue: TR = Average revenue x output
  • Unitary elasticity: When the coefficient of PED = 1

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