How is average revenue calculated?

Average revenue is calculated by dividing total revenue by the number of units sold. This measurement represents the revenue generated per unit of output sold, effectively giving businesses insight into their pricing and sales performance.

For instance, if a company sells 100 units for a total revenue of $1,000, the average revenue would be $1,000 divided by 100, which equals $10 per unit. This concept is fundamental in economics, as it helps firms understand not only their income from sales but also assists in determining pricing strategies and market demand.

The other choices focus on different financial measures. Total costs divided by the number of units produced pertains to average cost, which reflects the overall cost of production per unit instead of revenue. Fixed costs divided by quantity sold concerns itself with how overhead impacts profitability per unit and does not provide insight into revenue. Lastly, marginal cost divided by total output is unrelated as it deals with the additional cost per unit produced and not the revenue generated. Thus, average revenue accurately reflects the firm's performance regarding sales and pricing strategy.