Multiple Choice
Total revenue is best described as:
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4. Elasticity
Total Revenue Test
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Which of the following is a likely mathematical expression for total revenue?
A
TR = P \times Q
B
TR = Q \div P
C
TR = P - Q
D
TR = P + Q
Verified step by step guidance1
Understand that total revenue (TR) in microeconomics is the total amount of money a firm receives from selling its goods or services.
Recall the basic formula for total revenue, which is the price per unit (P) multiplied by the quantity of units sold (Q).
Express this relationship mathematically as \(TR = P \times Q\).
Evaluate the other options: dividing quantity by price (\(Q \div P\)), subtracting quantity from price (\(P - Q\)), or adding price and quantity (\(P + Q\)) do not represent total revenue.
Conclude that the correct mathematical expression for total revenue is \(TR = P \times Q\).
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