Lesson 4.1.4.6

4.1.4.6 Marginal, average and total revenue Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.1.4.6, Marginal, average and total revenue: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. Total revenue is defined as:

    • the change in price for each unit sold.
    • total cost minus total profit.
    • price divided by quantity sold.
    • price multiplied by quantity sold.

  2. Average revenue is defined as:

    • the change in total revenue from one more unit.
    • total revenue minus total cost.
    • total cost divided by quantity sold.
    • total revenue divided by quantity sold.

  3. Marginal revenue is defined as:

    • the average of all revenue received.
    • the change in total revenue from selling one more unit of output.
    • the revenue from the first unit sold only.
    • the revenue from fixed costs.

  4. A firm sells 4 units at £10 each and 5 units at £9 each. What is the marginal revenue of the fifth unit?

    • £9.
    • £45.
    • £1.
    • £5.

  5. A firm sells 4 units at £10 each and 5 units at £9 each. What is average revenue at 5 units?

    • £45.
    • £5.
    • £9.50.
    • £9.

  6. Why is the average revenue curve the same as the firm's demand curve?

    • Because the demand curve shows marginal revenue only.
    • Because the demand curve shows total cost.
    • Because average revenue equals the price the firm receives for each unit, and that price is read from the demand curve.
    • Because the demand curve is always horizontal regardless of market conditions.

  7. Under perfect competition, which statement about revenue is correct?

    • Price, average revenue and marginal revenue are all equal.
    • Marginal revenue is zero at all output levels.
    • Average revenue is always less than marginal revenue.
    • Marginal revenue is always greater than price.

  8. For a firm facing a downward sloping demand curve, what is the relationship between marginal revenue and average revenue?

    • Marginal revenue is greater than average revenue.
    • Marginal revenue is always equal to average revenue.
    • Marginal revenue is less than average revenue.
    • Marginal revenue is negative at all output levels.

  9. A firm's price falls from £10 to £9 when quantity rises from 4 to 5. Which statement correctly describes the marginal revenue of the fifth unit compared with its price?

    • MR is £14, which is above the price.
    • MR is £1, which is equal to the price fall.
    • MR is £9, which is equal to the price.
    • MR is £5, which is below the price of £9.

  10. Using a demand schedule where P = 10, 9, 8, 7, 6 for Q = 1 to 5, what is marginal revenue between 3 and 4 units?

    • £7.
    • £4.
    • £8.
    • £2.

  11. A demand schedule gives prices of £10, £9, £8, £7 and £6 for 1 to 5 units sold. At what output is total revenue highest?

    • 3 units.
    • 1 unit.
    • 2 units.
    • 5 units.

  12. When marginal revenue is zero, what is happening to total revenue?

    • Total revenue is rising at its fastest rate.
    • Total revenue is at its minimum.
    • Total revenue is equal to total cost.
    • Total revenue is at its maximum.

  13. When marginal revenue is negative, which statement is correct?

    • Total revenue is falling.
    • Average revenue is negative.
    • Total revenue is unchanged.
    • Total revenue is rising.

  14. A firm's average revenue curve is a straight line from £20 at zero output to £0 at 40 units. What is marginal revenue if the curve is linear and downward sloping?

    • MR starts at £20 and falls at twice the rate of AR, reaching zero at 20 units.
    • MR is constant at £20 at every output.
    • MR equals AR at every output.
    • MR rises as output rises.

  15. Which of the following best explains why marginal revenue can be lower than price for a firm with market power?

    • Because the firm does not sell its output.
    • Because the firm pays a lower price for its inputs.
    • Because to sell an extra unit the firm must reduce the price on all units sold, not just the extra one.
    • Because the firm's fixed costs are zero.

  16. A firm wants to maximise total revenue. Which output should it choose, given a linear demand curve?

    • The output where average revenue equals zero.
    • The output where marginal cost equals zero.
    • The output where price is at its highest.
    • The output where marginal revenue equals zero.

  17. Which statement best evaluates the use of total revenue maximisation as the objective for a firm?

    • It is always the best objective, because revenue equals profit.
    • It is irrelevant because firms never sell goods.
    • It is incomplete, because revenue does not account for costs, so a firm may need to consider profit rather than revenue alone.
    • It is the only objective firms ever pursue.

  18. Which of the following correctly describes the relationship between average and marginal revenue when average revenue is falling?

    • Marginal revenue must be rising and above average revenue.
    • Marginal revenue must be zero.
    • Marginal revenue must also be falling and is below average revenue.
    • Marginal revenue must equal average revenue.

  19. A firm sells 100 units at £6 each and then lowers its price to £5, selling 120 units. What is the marginal revenue of the extra 20 units?

    • £120 per unit, because quantity multiplied by price gives the answer.
    • £1 per unit, because the price fell by £1.
    • £0 per unit, because total revenue is unchanged at £600.
    • £2 per unit, because 20 units were added.

  20. A firm's total revenue is £120 at 12 units and £132 at 13 units. What is marginal revenue for the thirteenth unit?

    • £12, the change in total revenue divided by the change in quantity.
    • £10, the price charged at 12 units.
    • £11, the average revenue at 12 units.
    • £132, the total revenue at 13 units.

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