Revenue refers to the income earned by a firm from the sale of given quantity of a commodity in the market at different prices. 

Following are the three main types.

(A) Total Revenue (TR) : Total Revenue (Income) refers to total receipts of the firm from its sales of commodity. It is obtained i by multiplying the price per unit of the commodity with the total number of units!; of commodity sold to the consumers. Thus, Total Revenue = Price per unit x Total Number of units of commodity sold.

TR = Price x Quantity Sold

Example : If the firm sells 10 units of a commodity at ₹100 per unit then total revenue will be TR = 100 x 10. TR = ₹1000

(B) Average Revenue (AR): Average Revenue refers to the revenue (income) per unit of the commodity sold. It can be easily calculated by dividing Total Revenue (TR) by the number of units sold to the consumers. Thus, Average Revenue = Total Revenue + Number of units sold.

i.e., AR = \(\cfrac{TC}{Total\, Quantity\, Sold}\)

For example : If the Total Revenue from the sale of 10 units of commodity is ₹ 1000; then Average Revenue will be

AR = \(\cfrac{ TR}{Q}\) = \(\cfrac{1000}{10}\) = RS 100

(C) Marginal Revenue (MR) : Marginal Revenue is the net addition made to TR by selling an additional unit of the commodity. In other words, marginal revenue is the addition made to the total revenue by selling one more unit of a commodity.

Example : If the total revenue from the sale of 10 units is ?1000 and that from the sale of 11th unit the total revenue is 1020 then the MR of 11th unit will be.

MR_n = TR_n – TR_n-1 = 1020 – 1000 = 20

Or we can also calculate Marginal Revenue as

\(MR = \cfrac{Change\, in\, Total\, Revenue}{Change\, in\, Total\, of\, units\, sold}\)

\(MR = \cfrac{△TR}{△TQ} = \cfrac{20}{1} = 20\)

MR = 20