Total Revenue and Marginal Revenue Calculator

Marginal Revenue Formula:

\[ MR = \frac{\Delta TR}{\Delta Q} \]

Where:

\( MR \) - Marginal Revenue (USD/unit)
\( \Delta TR \) - Change in Total Revenue (USD)
\( \Delta Q \) - Change in Quantity (units)

Initial Total Revenue (TR₁):

USD

Final Total Revenue (TR₂):

USD

Initial Quantity (Q₁):

units

Final Quantity (Q₂):

units

Change in Total Revenue (ΔTR):

Change in Quantity (ΔQ):

Marginal Revenue (MR):

1. What is Marginal Revenue?

Marginal Revenue (MR) is the additional revenue generated from selling one more unit of a good or service. It's a fundamental concept in microeconomics that helps businesses determine optimal production levels and pricing strategies.

2. How the Calculator Works

The calculator uses the Marginal Revenue formula:

\[ MR = \frac{\Delta TR}{\Delta Q} \]

Where:

\( MR \) — Marginal Revenue (USD/unit)
\( \Delta TR \) — Change in Total Revenue (TR₂ - TR₁) in USD
\( \Delta Q \) — Change in Quantity (Q₂ - Q₁) in units

Calculation Steps:

Calculate the difference between final and initial total revenue
Calculate the difference between final and initial quantity sold
Divide the revenue change by the quantity change

3. Economic Interpretation

Key Insights: Marginal Revenue helps businesses understand how revenue changes with production. In perfect competition, MR equals price. In monopoly, MR decreases as quantity increases due to downward-sloping demand.

4. Using the Calculator

Instructions: Enter initial and final total revenue values in USD, and initial and final quantities in units. The calculator will compute the change in revenue, change in quantity, and marginal revenue.

5. Frequently Asked Questions (FAQ)

Q1: What does negative marginal revenue mean?
A: Negative MR means increasing production reduces total revenue, often occurring when price reductions outweigh quantity increases.

Q2: How is MR related to price elasticity?
A: MR is positive when demand is elastic (|E| > 1), zero when unit elastic (|E| = 1), and negative when inelastic (|E| < 1).

Q3: Why does MR matter for profit maximization?
A: Profit is maximized when Marginal Revenue equals Marginal Cost (MR = MC).

Q4: How does MR differ in perfect competition vs monopoly?
A: In perfect competition, MR = Price. In monopoly, MR < Price due to the need to lower price to sell more units.

Q5: Can MR be constant?
A: Yes, in perfect competition MR is constant and equal to the market price at all output levels.