What Is the Formula for Total Revenue?
Last Updated Mar 26, 2020 3:39:12 AM ET
According to AmosWeb, total revenue is calculated by multiplying the price received from the product times the quantity of the product sold at that price. Total revenue is usually depicted as a total revenue curve with it being directly related to marginal revenue and average revenue.
Total revenue is important to a firm's short-run production because it is an input in the calculation of profit (total revenue minus total cost). For perfectly competitive firms, the calculation is simplest as the price remains constant at any quantity. However, AmosWeb notes that calculations become complex when dealing with firms that charge different prices at different quantities.
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