Question

Write a short note on Marginal Revenue.

Answer 1

1. Marginal Revenue [MR] is the addition to the total revenue by the sale of an additional unit of a commodity.
2. MR can be found out by dividing change in total revenue by the change in quantity sold out.
3. MR = ∆TR/∆Q where MR denotes Marginal Revenue, ∆TR denotes a change in Total Revenue and ∆Q denotes a change in total quantity.
4. The other method of estimating MR is:

MR = TR_n – TR_n-1, (or) TR_n+1 – TR_n
Where MR denotes Marginal Revenue,
TR_n denotes total revenue of n^th item,
TR_n-1 denotes Total Revenue of n – 1^st item and
TR_n+1 denotes Total Revenue of n + 1^st item.
If TR = PQ,
MR = dTR/dQ = P, which is equal to AR.