What is the equation for total revenue?

• A. Quantity / Price
• B. Price x Quantity
• C. Price + Quantity
• D. Fixed costs x Variable costs

Answer: (B)

Total revenue is the money a business earns from selling its goods or services. It’s found by taking the price charged for each unit and multiplying it by the number of units sold. In other words, revenue equals price per unit times quantity sold.

Dividing price by quantity would not represent income from sales; it would yield a ratio, not revenue. Adding price and quantity mixes two different measures and doesn’t reflect money earned. Multiplying fixed costs by variable costs relates to expenses, not revenue. So the correct relation is price multiplied by quantity, giving total revenue.