What is meant by: Total Revenue (TR) curve?

The Total Revenue (TR) curve is a graphical representation that shows how the total revenue of a firm changes with changes in output level.

Here are the steps to understand it:

1. Definition: Total Revenue (TR) is the total receipts from selling a given quantity of goods or service. It is the total income of a business from its production activities.

2. Calculation: It is calculated as the price per unit (P) times the quantity of the units sold (Q). So, TR = P*Q.

3. TR Curve: The TR curve is a graph that shows the relationship between the total revenue and the quantity of the product sold. It is drawn with quantity on the x-axis and total revenue on the y-axis.

4. Shape of the Curve: The shape of the TR curve depends on the type of market structure and the price elasticity of demand. In perfect competition, where the firm is a price taker, the TR curve is a straight upward sloping line. In a monopoly or monopolistic competition, where the firm is a price maker, the TR curve initially rises at an increasing rate, reaches a maximum point, and then starts falling.

5. Importance: The TR curve is important as it helps in understanding the revenue generation capacity of a firm at different levels of output. It also helps in decision making regarding the level of output that will maximize the firm's revenue.