Marginal Revenue

Marginal revenue is the additional revenue that a company earns from selling one more unit of a product or service. It is calculated by dividing the change in total revenue by the change in quantity sold. In perfectly competitive markets, marginal revenue equals the price of the product. However, in markets with imperfect competition, marginal revenue decreases as output increases due to the downward-sloping demand curve.

Example

A company sells an additional smartphone, increasing total revenue by $500. The marginal revenue from selling that smartphone is $500.