Total Revenue and the Revenue Function
A firm's total revenue is calculated by multiplying the price per unit () by the quantity of units sold (), following the formula . [4] By utilizing the inverse demand function, , which indicates the highest price at which a quantity can be sold, revenue can be expressed purely as a function of quantity. [2] This is referred to as the revenue function, . On a price-quantity graph, the total revenue is visually represented by the rectangular area corresponding to a specific price and quantity on the demand curve.
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