(2) Marginal Revenue (MR)
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Answer:
A company calculates marginal revenue by dividing the change in total revenue by the change in total output quantity. Therefore, the sale price of a single additional item sold equals marginal revenue. For example, a company sells its first 100 items for a total of $1,000. If it sells the next item for $8, the marginal revenue of the 101st item is $8. Marginal revenue disregards the previous average price of $10, as it only analyzes the incremental change.
Answer:
Marginal revenue (or marginal benefit) is a central concept in microeconomics that describes the additional total revenue generated by increasing product sales by 1 unit.[1][2][3][4][5] To derive the value of marginal revenue, it is required to examine the difference between the aggregate benefits a firm received from the quantity of a good and service produced last period and the current period with one extra unit increase in the rate of production.[6] Marginal revenue is a fundamental tool for economic decision making within a firm's setting, together with marginal cost to be considered.[7]
Explanation:
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