For any firm operating in any market structure,marginal revenue (MR)equals

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is equal to the change in total revenue (TR) resulting from a one-unit increase in output quantity (q). Mathematically, MR= ΔTR/Δq. By taking the derivative of the total revenue function with respect to q, we obtain MR = dTR/dq. Using the product rule of differentiation, we get MR = (d/dq)(p × q) = p + q(dp/dq), where p is the price and dp/dq is the slope of the demand curve. Therefore, MR is the product of price and quantity, plus the rate at which the price changes as output increases. Rearranging the equation, we have MR/q = p + q(dp/dq), which shows that the marginal revenue curve lies below the demand curve, with a slope that is twice as steep. Therefore, the correct expression of MR is E) O(p × q)/Oq, which represents the change in total revenue resulting from the sale of one additional unit of output.

For Any Firm Operating in Any Market Structure,marginal Revenue (MR)equals