Average revenue is the same as market price of the commodity. Comment on this statement.
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Solution
Yes, we know that. AR=TR/Q We also know that,
TR=P×Q
(where P= Price and Q= Quantity or output sold) Relating the two equations, we can write that AR=TR/Q=(P×Q)/Q=P Hence, firm's average revenue means price of the product corresponding to a given level of output. Or, AR= Price