Question

Why is Average Revenue always equal to price?

Answer 1

Average Revenue (AR) is defined as the revenue earned per unit of output sold. AR is the same as the price(P) of the output(Q). Algebraically, it can be expressed as follows:

$AR=\frac{TR}{Q},whereTRistotalrevenue$

$\Rightarrow AR=\frac{P\times Q}{Q}$

$\Rightarrow AR=P$

Thus , AR is always equal to the price of the output.