Total Revenue Test Definition Economics

Term total revenue definition.

Total revenue test definition economics. Total revenue is the amount of money that a company earns by selling its goods and or services during a period of time e g. The unit cost per unit of production. A total revenue test approximates the price elasticity of demand by measuring the change in total revenue from a change in the price of a product or service. A total revenue test is a way for a company to determine whether demand for its product or good is elastic or inelastic.

A total revenue test is a method of estimating the price elasticity of demand. If an increase in price causes an increase in total revenue then demand can be said to be inelastic since the increase in price does not have a large impact on quantity demanded if an increase in price causes a decrease in total revenue then demand can be said to be elastic since the. In general microeconomic theory assumes that firms attempt to maximize the difference between total revenues and economic costs. The difference between total revenue and the firms explicit cost.

It helps to determine how the price of a product influences consumer willingness to buy it. In general total revenue is the price received for selling a good times the quantity of the good sold at that price. Print total revenue in economics. Also known as the total profit.

In economics the total revenue test is a means for determining whether demand is elastic or inelastic. If the hot dogs are sold at 4 00 each the total revenue would equal 40 10 x 40. Total revenue tr is found by multiplying price p by output i e. He has over twenty years experience as head of economics at leading schools.

Geoff riley frsa has been teaching economics for over thirty years. Total revenue and the price elasticity of demand have an interconnected relationship. Number of units sold. Definition of total revenue.

Definition formula worksheet 1. If an increase in price causes an increase in total revenue then the. It is also referred to as the total sales. A day or a week.

What revenue term in economics refers to the total receipts from sales of a given quantity of goods or services. Total revenue equals the number of items of a good or service sold multiplied by the price of the good or service. Terms in this set 50 accounting profit. The revenue received by a firm for the sale of its output total revenue is one of two parts a firm needs for the calculation of economic profit the other is total cost.