Which of the following best describes total revenue?

Total revenue is best defined as the price of a good or service multiplied by the quantity sold. This relationship captures the total income generated from sales before any costs or expenses are taken into account. The formula for total revenue is straightforward: if a business sells a specific number of units at a given price, the total revenue can be easily calculated by multiplying these two factors together.

Understanding total revenue is crucial for businesses because it helps determine their ability to cover costs and generate profit. When assessing performance, companies often look at total revenue to understand the effectiveness of their pricing strategies and sales efforts.

The other options do not accurately encapsulate the concept of total revenue. For instance, the subtraction of production costs or considerations of consumer expenditures may indicate profitability or market value but do not define the straightforward monetary amount generated from sales transactions. Total revenue specifically focuses on the direct income from selling goods and services, which is why the correct definition emphasizes the direct multiplicative relationship between price and quantity sold.