Concept of Market, Total Revenue, Average Revenue, and Marginal Revenue For NEB 12 Economics Students

 

Concept of Market, Total Revenue, Average Revenue, and Marginal Revenue

1️⃣ Concept of Market (बजारको अवधारणा)

📌 Definition:

A market is a place where buyers and sellers interact to exchange goods and services. It can be a physical place (like a vegetable market) or an online platform (like Amazon).

📌 Key Features of a Market:

• Presence of buyers and sellers.
• Exchange of goods and services.
• Price determination based on demand and supply.
• Can be local, national, or international.

📌 Example:

• A vegetable market where farmers sell their crops to consumers.
• Online marketplaces like Amazon or Daraz where people buy and sell goods.

---

2️⃣ Concept of Total Revenue (कुल आम्दानी – TR)

📌 Definition:

Total Revenue (TR) is the total income a firm earns from selling a product. It is calculated as:

$$TR = \text{Price per unit} \times \text{Quantity Sold}$$

📌 Example:

If a shopkeeper sells 50 pens at Rs. 10 each, then:

$$TR = 10 \times 50 = Rs. 500$$

📌 Bullet Points for TR:

• Total money earned from sales.
• Higher quantity sold means higher TR.
• TR helps businesses understand their total earnings.

---

3️⃣ Concept of Average Revenue (औसत आम्दानी – AR)

📌 Definition:

Average Revenue (AR) is the revenue earned per unit of product sold. It is calculated as:

$$AR = \frac{TR}{\text{Quantity Sold}}$$

📌 Example:

If a company earns Rs. 500 from selling 50 pens:

$$AR = \frac{500}{50} = Rs. 10 \text{ per pen}$$

📌 Bullet Points for AR:

• Revenue per unit sold.
• In perfect competition, AR = Price of the product.
• AR helps in pricing decisions.

---

4️⃣ Concept of Marginal Revenue (सीमान्त आम्दानी – MR)

📌 Definition:

Marginal Revenue (MR) is the extra revenue earned when selling one more unit of a product. It is calculated as:

$$MR = \frac{\Delta TR}{\Delta Q}$$

(Where ΔTR = Change in Total Revenue and ΔQ = Change in Quantity Sold)

📌 Example:

• If TR from selling 10 pens is Rs. 100 and TR from selling 11 pens is Rs. 108, then:

$$MR = \frac{108 - 100}{11 - 10} = Rs. 8$$

📌 Bullet Points for MR:

• Additional revenue from selling one extra unit.
• Helps businesses decide how much to produce.
• MR is constant in perfect competition but decreases in monopoly.

---

Summary Table for Better Understanding

Concept	Formula	Meaning	Example
Total Revenue (TR)	TR = Price × Quantity	Total money earned	Rs. 10 × 50 = Rs. 500
Average Revenue (AR)	AR = TR ÷ Quantity	Revenue per unit	Rs. 500 ÷ 50 = Rs. 10
Marginal Revenue (MR)	MR = ΔTR ÷ ΔQ	Extra revenue from one more sale	(108 - 100) ÷ (11 - 10) = Rs. 8

---

📌 Final Thoughts

• The market is a place where buyers and sellers exchange goods/services.
• TR helps firms understand their overall earnings.
• AR helps businesses decide pricing strategies.
• MR helps firms in production decisions.

💡 Tip for Students: Always remember, in perfect competition AR = MR = Price, but in monopoly, MR < AR! 😊