Which concept is calculated by dividing total revenue by output and equals the price charged per unit?

Which concept is calculated by dividing total revenue by output and equals the price charged per unit?

• A. Fixed Costs
• B. Average Revenue
• C. Revenue
• D. Contribution

Answer: (B)

Average revenue is the revenue earned per unit sold. It’s found by dividing total revenue by the quantity of output (TR ÷ Q). If every unit is sold at the same price, average revenue per unit equals the price charged. That’s why this concept fits the description. Fixed costs aren’t about revenue per unit—they’re costs that don’t vary with output. Revenue refers to total money from sales, not per unit. Contribution is the amount left after paying variable costs per unit, used to cover fixed costs, not the revenue per unit.

Average revenue is the revenue earned per unit sold. It’s found by dividing total revenue by the quantity of output (TR ÷ Q). If every unit is sold at the same price, average revenue per unit equals the price charged. That’s why this concept fits the description. Fixed costs aren’t about revenue per unit—they’re costs that don’t vary with output. Revenue refers to total money from sales, not per unit. Contribution is the amount left after paying variable costs per unit, used to cover fixed costs, not the revenue per unit.