marginal revenue

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Marginal revenue

The change in total revenue as a result of producing one additional unit of output.

Marginal Revenue

The revenue that a company generates over what it previously generated for each additional unit of output. For example, suppose a company generates $1000 in revenue from 100 units of a product (in other words $10 per unit). In order to sell 101 units it may have to reduce its price to $9.99 per unit. In this case, its revenue becomes $1008.99. Thus, the marginal revenue is $8.99.

marginal revenue

The extra revenue generated by selling one additional unit of a good or service. For example, if a firm can sell 10 units of a product at a price of $25 per unit, total revenue is $250. If, in order to sell 11 units, it must reduce the price to $24, total revenue rises to 11 × $24, or $264. Thus, the marginal revenue of the 11th unit is $264 - $250, or $14.

marginal revenue

the extra revenue that is obtained by a firm from the sale of additional units of product. If firms are profit maximizers they will seek to equate marginal revenue with MARGINAL COST to establish that price output/sales combination which yields an optimal return. See BUSINESS OBJECTIVE.
Marginal revenueclick for a larger image
Fig. 119 Marginal revenue. (a) Under PERFECT COMPETITION, each extra unit of output sold adds exactly the same amount to total revenue as previous units.

Under conditions of imperfect competition (for example, MONOPOLISTIC COMPETITION) the firm faces a downward sloping demand curve and price has to be lowered in order to sell more units. Marginal revenue is less than price: as price is lowered each extra unit sold adds successively smaller amounts than previous units.

marginal revenue

the addition to TOTAL REVENUE from the sale of one extra unit of output. Under conditions of PERFECT COMPETITION, the firm faces a horizontal DEMAND CURVE at the going market price (marginal revenue = price). See Fig. 119 (a) . Marginal revenue interacts with MARGINAL COST in determining the level of output at which the firm achieves its objective of PROFIT MAXIMIZATION. See AVERAGE REVENUE, ELASTICITY OF DEMAND, KINKED DEMAND CURVE, MONOPOLY.
References in periodicals archive ?
represents the marginal gain (or loss) obtained by taking away marginal costs from marginal revenues. In Figure 2a this difference is shown for a general time a by the segment RF if you are thinking about full-time only.
A comparison of market-clearing prices, estimated marginal revenues and marginal costs allows us to check whether the first order conditions of unilateral profit maximization were satisfied in practice.
firm context, it makes sense to depict declining marginal revenues and
(5) The well-known Shapley value, in this case the expected marginal revenue of each song, averaging over all of its possible arrival orders in the bundle, provides a theoretical solution to the revenue-sharing problem.
It will only reduce supply if marginal revenues for the OPEC at [R.sub.1] were negative: the optimal tax t for a given emission reduction target is thus given by t = MR([R.sub.1]).
If players in a competitive player market under profit maximization are paid according to their marginal revenue (their contribution to the team's revenue), does it mean that players in a win-maximization league are overpaid, that is: above marginal revenue?
To successfully address the problem of imbalance in the league, redistribution must affect teams' marginal revenue functions.
), (1) each type of club seeking to attract the best players available on the market, according to the hypothesis that the richest clubs and/or those expecting the highest marginal revenues want the best players and the best back-up team.
Estimated marginal revenues from fund-raising and selective incentives show that environmental citizen group managers are not preoccupied with maximizing revenues.
In the second part of Case B, the situation where the demand curve is only mildly concave (P[double prime] [less than] 0), it is shown that smaller firms will again decrease production but large firms may go either way, depending upon the relative magnitude of the advantage from higher after-tax marginal revenues. It is clear from (6) that the sign of (dSLF/dt) cannot be determined without detailed information on not only the direction and size of each firm's adjustment in output, but also the magnitudes of the resulting changes in the external discomfort and the noncompetitive distortion.
The first two terms in equation (2) describe the marginal revenues in segments 1 and 2, respectively.
Marginal revenues generated by the follow-up procedures and office visits with the author following this free skin-cancer screening exceeded by 3.5 times the marginal cost of the screening.