Final answer:
Average revenue is the total revenue divided by quantity, representing the average income from each unit sold. Total revenue is calculated by multiplying price and quantity, while marginal revenue is the change in total revenue from an additional unit sold.
"the correct option is approximately option B"
Step-by-step explanation:
When analyzing firm's revenue metrics, we use different calculations to understand their performance. The question asks what we call the total revenue divided by quantity. The answer to this is b. average revenue.
Total revenue is the total income a firm generates from selling its goods and services, calculated using the formula: Total Revenue = Price x Quantity. This represents the total amount of money made from sales. To determine the average revenue, we take this total revenue and divide it by the quantity of goods or services sold. Thus, average revenue gives the average amount of money the firm makes per unit of output and stands as the price of the good when the price remains constant for all units sold.
On the other hand, marginal revenue is calculated differently; it is the change in total revenue from selling one additional unit of a product. Therefore, if you are asked about the revenue obtained specifically from selling one more unit, you would be looking at marginal revenue.
In summary, understanding these differences in revenue calculations is crucial for businesses to make informed decisions about pricing, production, and profitability strategies.