Total revenue (TR): This is the total income a firm receives. This will equal price × quantity. Average revenue (AR) = TR / Q. Marginal revenue (MR) = the extra revenue gained from selling an extra unit of a good. Profit = Total revenue (TR) – total costs(TC) or (AR – AC) × Q. Total profit, also called gross profit, is calculated by taking the total received from sales and subtracting the cost of the goods sold. It does not include expenditures, such as insurance and taxes. Gross profit is used to calculate the gross profit margin. Profit maximization is the short run or long run process by which a firm determines the price and output level that will result in the largest profit. Firms will produce up until the point that marginal cost equals marginal revenue. Total revenue in economics refers to the total receipts from sales of a given quantity of goods or services. It is the total income of a business and is calculated by multiplying the quantity of goods sold by the price of the goods. Is it rational for companies to focus on Total Revenue?
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