Final answer:
A firm's total revenue is calculated by multiplying the selling price of a product by the quantity of output sold.
Step-by-step explanation:
A firm's total revenue is calculated as price times quantity produced. Specifically, total revenue is the income a firm generates from selling its products, which is found by taking the selling price of a product and multiplying it by the number of units sold, or the quantity of output sold. This is a fundamental concept in both economics and business. The formula for calculating total revenue is: Total Revenue = Price x Quantity.
Understanding this concept is crucial for firms as they make decisions regarding pricing and production levels to maximize profits. It should also be noted that while total revenue provides information on the income side, it does not account for the costs associated with production. Consequently, it is the interplay between total revenue and total costs that ultimately determines profitability.