The calculation of marginal revenue is best described by which of the following equations if R(q)equals total revenue for a given level of output (q)?
A) marginal revenue = R(q) × R(q - 1)
B) marginal revenue = R(q) + R(q - 1)
C) marginal revenue = R(q)/R(q - 1)
D) marginal revenue = R(q) - R(q - 1)
E) marginal revenue = [R(q) + R(q - 1)]/R(q)

Question

Quizplus · Accepted Answer

The correct formula for calculating marginal revenue is the change in total revenue resulting from a one-unit change in quantity demanded, which is expressed as MR(q) = R(q) - R(q-1). This formula subtracts the total revenue at the previous output level from the total revenue at the new output level to arrive at the incremental revenue from selling one more unit.

The Calculation of Marginal Revenue Is Best Described by Which