Marginal Revenue Explained, With Formula and Example
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Marginal Revenue Explained, With Formula and Example
Marginal revenue is the incremental gain produced by selling an additional unit. It follows the law of diminishing returns, eroding as output levels increase.
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Marginal Revenue Formula
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The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of 10: a. Calculate the firm's marginal revenue curve. b. What are the firm's profit-maximizing output and price? What is its profit? c. What would the equilibrium price and quantity be in a competitive industry? d. What would the social gain be if this monopolist were forced to produce and price at the competitive equilibrium? Who would gain and lose as a result? | Numerade
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