As per the NCERT glossary, average revenue is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → total revenue per unit of output
Average revenue is total revenue divided by the units sold. For a price-taking firm it equals the market price.
Option (1) total revenue minus total cost, per unit of output — Incorrect. TR minus TC is profit, so this is profit per unit of output. Average revenue uses total revenue alone.
Option (2) the market price multiplied by the quantity sold — Incorrect. This is total revenue.
Option (3) the increase in total revenue for a unit increase in output — Incorrect. This is marginal revenue.
Option (4) total revenue per unit of output — Correct. This is the Glossary meaning of AR.
NCERT (2026-27): Glossary: “Average revenue – Total revenue per unit of output.” Glossary: “Total revenue – is equal to the market price of the good multiplied by the quantity of the good sold by a firm.” Glossary: “Profit – is the difference between a firm’s total revenue and its total cost of production.” |