PRC-3 · Chapter 12 · Question 68 of 69
By taking the standard equation for Total Revenue (TR = P x Q) and substituting it into the Average Revenue formula (AR = TR / Q), we definitively prove that Average Revenue is always equal to:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Product Price
Explanation
Since TR is Price multiplied by Quantity, dividing TR by Quantity perfectly cancels out Q, leaving only Price. Thus, AR = Price.
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