Revenue Total revenue - the income derived from sales of a product over a period of time. Often referred to as turnover. TR = P x Q where Q is quantity sold and P is price sold at Average revenue - revenue generated per unit of output sold. Found by dividing the TR by Q. It is the same as the demand curve . P = AR = TR/Q Marginal revenue - the revenue gained in selling an additional unit(s) of output. This is the rate of change of TR (so the gradient and the first differential). Diagrammatic analysis As you can see here, MR is the gradient of TR - where the grad of TR is 0 (the maximum), MR cuts the x-axis. MR has a gradient that is double that of AR. Elasticity and revenue Where demand is price elastic, a fall in price causes a greater than proportionate rise in demand, and revenue increases. Where price is elastic, the firm should price cut in order to increase re...