Calculation of Total Expenditure and Total Revenue

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    Calculation of Total Expenditure and Total Revenue

    • Data which is drawn from a demand curve can be used to calculate the total expenditure made by the consumer
    • In turn, this is the total revenue or sales of the producer
      • Total Expenditure = (price x quantity demanded)

     

    • If we take another look at the ‘holidays in Ibiza’ market demand curve, we can see at a price of £300, 1000 holidays will be demanded
    • Total expenditure by those consumers is (300 x 1000) = 300,000
    • If the price rises to £325, then 900 holidays are demanded
    • This means that the total revenue of the tour operator is (900 x 325) = £292,500

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