In economics, what are the rules for total revenue?

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pohnpei397 eNotes educator| Certified Educator

I am not completely sure what you mean by rules.  There are tests that use total revenue, and there is a definition and a formula for total revenue, but there are not really any rules that are simply about total revenue.

Total revenue is the total value of all the goods or services that a business sells.  It is the total amount of money that the business brings in in a given time period.  As an equation, TR = price x quantity sold.  Of course, in a real business, there would be many different items, each with its own price and quantity and you would need to add them up to get total revenue.

The total revenue test is used to measure elasticity of demand.  We look at the total revenue taken in for a product at different prices and use that to determine how elastic the demand for that product is.