For all firms,the extra revenue collected from the sale of one extra unit of output is
A) price.
B) average revenue.
C) marginal profit.
D) marginal revenue.
E) marginal price.

Question

Quizplus · Accepted Answer

The extra revenue collected from the sale of one extra unit of output is known as marginal revenue. Marginal revenue is the change in total revenue when one additional unit of output is sold, and it is equal to the selling price of the unit only under perfect competition. Therefore, option D, marginal revenue, is the correct choice. Option A, price, is not correct because it refers to the selling price of the product, which is not necessarily the same as the marginal revenue. Option B, average revenue, is the total revenue divided by the quantity sold, and it is not the same as marginal revenue. Option C, marginal profit, is also not correct because profit is the difference between total revenue and total cost, and it is not equal to marginal revenue. Option E, marginal price, is not a commonly used term in economics, and it is not equivalent to marginal revenue.

For All Firms,the Extra Revenue Collected from the Sale of One