# Total Revenue in Economics: Definition & Formula Learn what total revenue is and why it is important to understand. Discover the formula to calculate total revenue and find out how you can maximize your total revenue in business.
What Is Total Revenue in Economics?
In business and economics, one of the most important measures for evaluating your success and progress is looking at the trends in your total revenue. You need to know this important measure so that you can eventually calculate your total profit for a business.
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. For example, if Company A produces 100 widgets and sells them for \$50 each, the total revenue would be 100 * \$50 = \$5,000. In economics, total revenue is often represented in a table or as a curve on a graph.
It is important to note that the concept of revenue in economics usually involves two other key terms. The first term is average revenue (AR), which refers to the revenue per unit of output sold. It is obtained by dividing the total revenue by the number of units sold.
The second term is marginal revenue (MR), which is the additional revenue generated from the sale of an additional unit of output. In other words, it’s the change in total revenue from the sale of one more unit of a good. For example, if Company A sold one more widget and their revenue increased from \$5,000 to \$5,050, the marginal revenue would be equal to \$50.