Marginal Revenue Economics Definition

Marginal revenue in perfectly competitive markets.

Marginal revenue economics definition. Marginal revenue product mrp. It follows the law of diminishing returns eroding as output levels increase. It is all about adding one more onto the pile and measuring the extra pleasure cost tax revenue price amount saved amount spent amount produced etc. It can be calculated by comparing the total revenue generated from a given number of sales e g.

Marginal revenue product mrp also known as the marginal value product is the market value of one additional unit of output. But because the conditions required for perfect. This article focuses on the term s meaning in economics. In accounting the terms sales and revenue can be and often are used interchangeably to mean the same thing.

Marginal revenue is an economic metric defined as the increase in a company s gross revenue from selling one additional unit of its product. In a perfectly competitive market or one in which no firm is large enough to hold the market power to set price of a good if a business were to sell a mass produced good and sells all of its goods at market price then the marginal revenue would simply be equivalent to the market price. Marginal revenue mr is the incremental gain produced by selling an additional unit. 11 units and the total revenue generated from selling one extra unit i e.

Marginal revenue is the revenue sales revenue sales revenue is the income received by a company from its sales of goods or the provision of services. Marginal revenue definition. Marginal revenue is the additional income generated from the sale of one more unit of a good or service.