How to Calculate Annual Total Revenue of a Shrimp Fisherman

Question:

If a shrimp fisherman catches 4,000 pounds of shrimp per year and sells them for $5 per pound with an average total cost of $3 per pound, what is the annual total revenue?

a. $12,000
b. $32,000
c. $20,000
d. $8,000

Answer:

Bubba’s annual total revenue is c. $20,000

Revenue is the total amount that comes from sales, regardless of cost. In this case, Bubba catches 4,000 pounds of shrimp and sells them for $5 per pound. Therefore, to calculate Bubba's annual total revenue, we need to multiply the number of pounds caught by the selling price per pound.

Bubba's annual total revenue = 4,000 pounds * $5 = $20,000

It is important to note that the average total cost of $3 per pound is not necessary to calculate the revenue. Revenue is simply the total amount received from selling the product.