Economics Cost Of Production Questions
Average revenue refers to the total revenue earned by a firm per unit of output sold. It is calculated by dividing the total revenue by the quantity of output sold.
The relationship between average revenue and production costs is that average revenue helps determine the profitability of a firm's production. If the average revenue is greater than the average cost of production, the firm is making a profit. Conversely, if the average revenue is less than the average cost of production, the firm is incurring losses. Therefore, the relationship between average revenue and production costs is crucial in determining the financial performance of a firm.