Average Revenue is the amount of money brought into a business divided by the number of units sold. The average revenue minus the average total cost is a way to get the profit per item sold. Total revenue is not inherently a positive thing. Diminishing marginal utility results in increased cost per product product, so increasing total revenue too much results in higher prices compared to the average revenue. Thus, average revenue is a more useful number when looking for the number of items to produce. Average revenue is also a useful way to determine the price of products being produced. This is b/c the total revenue divided by the number of individual units is by definition the price.
Even though it is better than total revenue, Average revenue does not tell you exactly how many units to produce either. One must look for marginal revenue, that is the change in revenue per unit sold extra, and find where this intersects with marginal cost. Normally this is the same as average revenue when prices are uniform, but not always.

For example:

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This graph shows that sometimes average revenue is not the same as marginal revenue in the case of a monopoly.

This video explains general revenue curves.


If Average Revenue is more than Average Total cost, then should a company keep producing more items?