Examples of revenue in the following topics:
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- Companies can also receive revenue from interest, royalties, and other fees.
- Businesses analyze revenue in their financial statements.
- Revenue is an important financial indiator, though it is important to note that companies are profit maximizers, not revenue maximizers.
- It generates revenue by selling its output.
- It is however, a profit maximizer, not an output or revenue maximizer.
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- For monopolies, marginal cost curves are upward sloping and marginal revenues are downward sloping.
- revenue, and their spending, i.e. costs.
- The marginal revenue curve for monopolies, however, is quite different than the marginal revenue curve for competitive firms.
- Production occurs where marginal cost and marginal revenue intersect.
- Production occurs where marginal cost and marginal revenue intersect.
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- The total revenue-total cost perspective and the marginal revenue-marginal cost perspective are used to find profit maximizing quantities.
- There are two ways in which cost curves can be used to find profit maximizing quantities: the total revenue-total cost perspective and the marginal revenue-marginal cost perspective.
- The total revenue-total cost perspective recognizes that profit is equal to the total revenue (TR) minus the total cost (TC).
- When a table of costs and revenues is available, a firm can plot the data onto a profit curve.
- The marginal revenue-marginal cost perspective relies on the understanding that for each unit sold, the marginal profit equals the marginal revenue (MR) minus the marginal cost (MC).
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- The marginal revenue product of labor is the change in revenue that results from employing an additional unit of labor.
- The marginal revenue product of labor (MRPL) is the change in revenue that results from employing an additional unit of labor, holding all other inputs constant.
- The marginal revenue product of a worker is equal to the product of the marginal product of labor (MPL) and the marginal revenue (MR) of output, given by MR×MP: = MRPL.
- Theory states that a profit maximizing firm will hire workers up to the point where the marginal revenue product is equal to the wage rate, because it is not efficient for a firm to pay its workers more than it will earn in revenues from their labor.
- Define the marginal product of labor under the marginal revenue productivity theory of wages
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- In order to maximize profit, the firm should set marginal revenue (MR) equal to the marginal cost (MC).
- Marginal revenue is the additional revenue that will be generated by increasing product sales by one unit.
- Marginal revenue is calculated by dividing the change in total revenue by the change in output quantity.
- Firms will produce up until the point that marginal cost equals marginal revenue.
- This graph shows a typical marginal cost (MC) curve with marginal revenue (MR) overlaid.
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- A firm will implement a production shutdown if the revenue from the sale of goods produced cannot cover the variable costs of production.
- Economic shutdown occurs within a firm when the marginal revenue is below average variable cost at the profit-maximizing output.
- When determining whether to shutdown a firm has to compare the total revenue to the total variable costs.
- If the revenue the firm is making is greater than the variable cost (R>VC) then the firm is covering it's variable costs and there is additional revenue to partially or entirely cover the fixed costs.
- A firm that exits an industry does not earn any revenue, but is also does not incur fixed or variable costs.
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- In a perfectly competitive market, the wage rate is equal to the marginal revenue product of labor.
- To determine demand in the labor market we must find the marginal revenue product of labor (MRPL), which is based on the marginal productivity of labor (MPL) and the price of output.
- Conceptually, the MRPL represents the additional revenue that the firm can generate by adding one additional unit of labor (recall that MPL is the additional output from the additional unit of labor).
- Thus, workers earn a wage equal to the marginal revenue product of their labor.
- The graph shows that a factor of production - in our case, labor - has a fixed supply in the long run, so the wage rate is determined by the factor demand curve - in our case, the marginal revenue product of labor.
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- MR (Marginal Revenue) = Change in Total Revenue / Change in Quantity
- The average revenue (AR) is the amount of revenue a firm receives for each unit of output.
- The marginal revenue (MR) is the change in total revenue from an additional unit of output sold.
- The arrival of new firms in the market causes the demand curve of each individual firm to shift downward, bringing down the price, the average revenue and marginal revenue curve.
- Calculate total revenue, average revenue, and marginal revenue for a firm in a perfectly competitive market
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- Economic profit consists of revenue minus implicit (opportunity) and explicit (monetary) costs; accounting profit consists of revenue minus explicit costs.
- In one year, it cost $60,000 to maintain production, but earned $100,000 in revenue.
- The accounting profit would be $40,000 ($100,000 in revenue - $60,000 in explicit costs).
- In general, profit is the difference between costs and revenue, but there is a difference between accounting profit and economic profit.
- The monetary revenue is what a firm receives after selling its product in the market.
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- Firms will demand labor until the marginal revenue product of labor is equal to the wage rate.
- The additional revenue generated by hiring one more unit of labor is the marginal revenue product of labor (MRPL).
- The marginal revenue product of labor (MRPL) is the additional amount of revenue a firm can generate by hiring one additional employee.
- At a price of $10, the company will hire workers until the last worker hired gives a marginal revenue product of $10 .
- Explain how a company uses marginal revenue product in hiring decisions