Marginal Revenue

Marginal Revenue

• Marginal Revenue is the extra revenue per additional unit of output.

MR =

² TR

² Q

If price is constant at all sales levels,

then MR = Price.

Some firms have to lower their

price to sell more.

P = 100 - 2Q Demand

TR = PxQ = 100 Q - 2Q2

MR = 100 - 4Q

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If firms have to lower their price to sell more, marginal revenue declines as price increases.