Total revenue
Also called: TR · Topic: Theory of the Firm, Supply and Perfect Competition · NCERT: Class 12, Ch 4 "The Theory of the Firm under Perfect Competition"
Meaning
Total revenue (TR) is the total money a firm earns from its sales, before any expenses are deducted. TR = p × q (market price × output) For a price-taking firm the price is fixed, so the TR curve is a straight line. It starts at the origin (zero output gives zero revenue) and rises steadily. Its slope equals the market price p.
Example
In NCERT's candle example, the price is ₹10 per box. TR is ₹0, ₹10, ₹20, ₹30, ₹40 and ₹50 for 0 to 5 boxes. Each extra box adds the same ₹10.
Don't confuse with
- Profit: this is TR minus total cost. A firm with large TR can still make a loss if its costs are higher.