Question

Formula to calculate marginal revenue in economics

Answer 1

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 will equal marginal revenue. For example, a company sells 100 items for a total of $1,000.

Answer 2

The marginal revenue formula is calculated by dividing the change in total revenue by the change in quantity sold. To calculate the change in revenue, we simply subtract the revenue figure before the last unit was sold from the total revenue after the last unit was sold.