Question

Explain Marginal Revenue (MR) curves.

Answer 1

Marginal revenue is the net revenue obtained by selling an additional unit of the commodity.

Therefore, selling one more unit of the commodity adds to the overall revenue, which is known as marginal revenue. The net addition to the total revenue from selling n units of a commodity rather than n − I is known as marginal revenue in algebraic terminology.

`MR = (ΔTR)/(ΔQ)`

MR = TR_n − TR_n-1

Whereas TR_n = Total Revenue of 'n' units

TRn − l = Total Revenue from (n − 1) units 

MR = Marginal revenue

n = Any given number

If total revenue from (n) units is 110 and from (n − 1) units is 100, in that case,

MR = TR_n − TR_n-1

MR = 110 − 100

MR = 10

The ratio of change in total income to change in output is known as MR in mathematics.

`MR = (ΔTR)/(Δq) or (dR)/(dq) = MR`