Marginal revenue is the additional revenue generated from selling one more unit of output. It is an important concept in economics and business, as it can be used to determine the optimal price and output level for a product or service.
How to calculate marginal revenue
To calculate marginal revenue, you can use the following formula:
Marginal revenue = (Change in total revenue) / (Change in quantity)
For example, if a company sells 100 units of a product for $10 each, its total revenue is $1000. If the company then sells 101 units of the product for $10 each, its total revenue is $1010. The marginal revenue from selling the 101st unit is therefore $1.
Example:
Suppose a company sells widgets for $10 each. The company currently sells 100 widgets per day. The company decided to increase the price of widgets to $11 per day. As a result, the company sells 95 widgets per day.
To calculate the marginal revenue from increasing the price of widgets, we can use the following formula:
Marginal revenue = (Change in total revenue) / (Change in quantity)
Change in total revenue = (11 * 95) - (10 * 100) = $15
Change in quantity = 100 - 95 = 5
Marginal revenue = $15 / 5 = $3
Therefore, the marginal revenue from increasing the price of widgets is $3.
Conclusion:
Marginal revenue is an important concept in economics and business. By understanding how to calculate marginal revenue without a chart, you can make better decisions about pricing, output, and capacity.
How to Calculate Marginal Revenue? What is Marginal Revenue? - I hope this article was informative.
