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Question
Distinguish between Average Revenue and Average Cost.
Distinguish Between
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Solution
| Sr. No. | Average Revenue | Average Cost |
| (i) | Average Revenue (AR) refers to the total revenue per unit of output sold. | Average Cost (AC) refers to the total cost of production per unit. |
| (ii) | It is obtained by dividing the total revenue by the number of units sold. | It is calculated by dividing total cost by total quantity of production. |
| (iii) | Average Revenue = `"Total Revenue"/"Total Quantity (sold)"` | Average Cost = `"Total Cost"/"Total Quantity (produced)"` |
| (iv) | Normally, the Average Revenue of a commodity will always be more than its Average Cost. | Normally, the Average Cost of a commodity will always be less than its Average Revenue. |
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