Definition of Average Revenue (AR):
Average Revenue (AR) is the total revenue generated per unit of output produced by a firm. It is calculated by dividing the total revenue by the quantity of output.
Explanation:
To understand the concept of Average Revenue (AR), it is important to know the following:
1. Total Revenue (TR): Total revenue is the total amount of money received by a firm from the sale of its goods or services. It is calculated by multiplying the price per unit by the quantity of output sold.
2. Quantity of Output: The quantity of output refers to the number of units of goods or services produced by a firm.
Now, let's break down the options given and determine the correct answer:
A: Total cost per unit produced - This option refers to the cost incurred by a firm to produce each unit of output, which is not related to the concept of average revenue. Therefore, this is not the correct answer.
B: Total Revenue per unit of output - This option correctly defines average revenue. It is the total revenue generated per unit of output produced by a firm. Therefore, this is the correct answer.
C: Total revenue per unit of inputs used - This option refers to the relationship between total revenue and the inputs used by a firm, which is not the same as the concept of average revenue. Therefore, this is not the correct answer.
D: Sum of Total Revenue and price - This option is incorrect as it suggests adding total revenue and price, which is not the definition of average revenue.
Therefore, the correct answer is B: Total Revenue per unit of output.

Explanation:

Average Revenue (AR) is a concept in economics that 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.

Definition:

Average Revenue (AR) can be defined as the total revenue per unit of output sold.

Calculation:

AR = Total Revenue / Quantity of Output

Meaning:

Average Revenue represents the amount of revenue a firm receives for each unit of output sold. It helps in understanding the pricing and revenue generation of a business.

Importance:

Average Revenue is an important measure for businesses as it helps in determining the revenue generated per unit of output. It is useful for decision-making related to pricing strategies and revenue forecasting.

Example:

For example, if a company sells 100 units of a product and earns a total revenue of $10,000, then the Average Revenue would be $100 ($10,000 / 100 units). This means that the company receives $100 for each unit of the product sold.

Interpretation:

The Average Revenue value helps in understanding the relationship between the price charged for a product and the quantity of output sold. If the AR is high, it indicates that the company is able to charge a higher price for its products, resulting in higher revenue per unit sold. Conversely, if the AR is low, it suggests that the company is charging a lower price, resulting in lower revenue per unit sold.

Conclusion:

In conclusion, Average Revenue (AR) is the total revenue earned by a firm per unit of output sold. It is an important measure for businesses to understand their pricing and revenue generation. It is calculated by dividing the total revenue by the quantity of output sold.