a) Total revenue: The firm gets from the sale of its products

Revenue = price X output

Average revenue: (Total revenue) / (total output)

i.e AR = Price

b) Marginal revenue: it is an addition made to total revenue by the sale of an additional unit of the product in the market Fig: equation of MR

Efficient Production

The MC=MR is optimizing rule force adjustments in output because of inequalities in cost and returns at the margin. If MR is at any level of output is exceeds MC, that inequality simply tells the operator that an additional surplus can be captured and added to profit by increasing outputs. The opposite signal is forceful when MC exceeds MR.