Distinguish between : Average cost and Average revenue
Q.2 (B) (iii) Distinguish between : Average cost and Average revenue
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Answer: Average cost vs Average revenue
| Basis | Average cost | Average revenue |
|---|---|---|
| Meaning | Cost per unit of output produced. | Revenue per unit of output sold. |
| Formula | \(AC = \dfrac{TC}{Q}\) | \(AR = \dfrac{TR}{Q}\) |
| Side | Related to the producer’s cost (supply side). | Related to the sale proceeds (demand side); AR = price. |
| Components | AC = AFC + AVC. | No such components. |
| Curve | Usually U-shaped. | Downward sloping (horizontal under perfect competition). |
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· 28 Oct 2026
AI-verified · Oct 2026
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