1.

Give meaning of total cost and total revenue.

Answer»

1. Total Cost (TC):

  • The summation of Total Fixed Cost (TFC) and Total Variable Cost (TVC) is called Total Cost (TC).
  • Therefore, TC = TFC + TVC

2. Total Revenue (TR):

  • Money received by a firm on selling the units it produces is known as revenue. The total income received by firm from sale is called total revenue. This income is known as total revenue or sale revenue.
  • A firm’s total income is based on two things:
    1. Price per unit and
    2. Total sale.
  • Change in one or both the factors brings change in the revenue of the firm.

Formula:
Total Revenue (TR) = Units sold (Q) × Price of commodity (P)


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