How To Calculate Marginal Revenue Product

Marginal revenue formula calculator.

How to calculate marginal revenue product. Marginal revenue formula. To analyze consumer demand or demand of the product in the market misjudging of customer demand leads to a shortage of products and loss of sales and production in excess leads to excess manufacturing cost. To calculate marginal revenue start by multiplying the current price per product by the current number of products sold to find the total revenue. In a monopoly market the demand and supply determine the marginal revenue.

Then subtract the original revenue from the alternate revenue. Where marginal cost is the increase in cost as a result of producing one additional unit of the product. In a competitive market the marginal cost will determine the marginal revenue. Marginal revenue is easy to calculate.

The profit maximization formula. All you need to remember is that marginal revenue is the revenue obtained from the additional units sold. This is a microeconomic term but it also has many financial and managerial accounting applications management uses marginal revenue to analyze below points.