Marginal Revenue (MR)

Definition

Marginal revenue refers to the additional revenue generated from selling one more unit of a product. It is calculated by dividing the change in total revenue by the change in quantity sold.

Analogy

Think of marginal revenue as a bonus you receive for completing an extra task at your part-time job. Each time you complete an additional task, you earn some extra money on top of your regular paycheck.

Related terms

Total Revenue (TR): Total revenue is the overall income earned from selling a certain quantity of goods or services.

Marginal Cost (MC): Marginal cost represents the additional cost incurred when producing one more unit of a product.

Price Elasticity of Demand (PED): Price elasticity of demand measures how responsive consumers are to changes in price.