Question

If total revenue is Rs. 1,00,000 when 20,000 units are sold, then the average revenue will be equal to

• A. Rs. 1,00,000
• B. Rs. 20,000
• C. Rs. 5
• D. Rs. 1,20,000

Hint:

Average revenue is calculated as total revenue divided by the number of units sold.

Answer 1

The Correct Option is C

Step 1: Understanding Average Revenue:
Average revenue (AR) is calculated as total revenue (TR) divided by the number of units sold (Q): \[ AR = \frac{TR}{Q} \] Given that total revenue is Rs. 1,00,000 and the quantity sold is 20,000 units, we can calculate average revenue as: \[ AR = \frac{1,00,000}{20,000} = 5 \]
Step 2: Analyzing the Options:
- Option (A) Rs. 1,00,000: This is incorrect. This is the total revenue, not the average revenue.
- Option (B) Rs. 20,000: This is incorrect. This is not the average revenue.
- Option (C) Rs. 5: This is the correct answer. The average revenue is Rs. 5 when total revenue is Rs. 1,00,000 and 20,000 units are sold.
- Option (D) Rs. 1,20,000: This is incorrect. This is not the average revenue.
Step 3: Conclusion and Answer:
The correct answer is (C) because average revenue is Rs. 5 when the total revenue is Rs. 1,00,000 and 20,000 units are sold.