Question

How can we get marginal revenue from total revenue?

Answer 1

We can find Marginal Revenue (MR) from Total Revenue (TR) by measuring how much TR increases when one extra unit is sold. 

• Marginal revenue is the additional income a firm earns by selling one more unit of a product.
• It is calculated using the formula MR = TR_n − TR_n−1
  This means Revenue after selling n units – Revenue after selling (n − 1) units.

Example:

If a firm earns ₹ 300 by selling 15 units and ₹ 304 by selling 16 units, then:

MR = 304 − 300 = ₹ 4