Average revenue
Average revenue (AR) is calculated as Total Revenue ÷ Quantity (TR ÷ Q), representing the revenue per unit sold. It equals the price charged for each unit of output.
Real World
A local coffee shop selling every cup at £3.50 has an average revenue of £3.50 per unit, and its AR curve is simply its demand curve showing what customers will pay at each quantity.
Exam Focus
State that AR equals price and equals the demand curve — this earns easy definition marks on diagram questions.
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