What does total revenue represent for a firm?

Total revenue is defined as the total income generated from the sales of goods or services before any costs or expenses are deducted. It is calculated by multiplying the price at which goods or services are sold by the quantity sold. This metric is crucial for assessing a firm's overall financial performance, as it provides insight into the demand for its products and the effectiveness of its pricing strategies.

While cost of production refers to the expenses incurred in the process of creating goods or services, it does not represent revenue. Additionally, net profit is derived after subtracting costs, expenses, and taxes from total revenue, making it a measure of profitability rather than revenue itself. Lastly, total output produced pertains to the quantity of goods created but does not directly connect to the financial concept of revenue, which is focused on income received from sales rather than the physical amount produced. Therefore, total revenue specifically reflects the firm's income from its sales activities.