For a firm, marginal revenue is best described as the:
Correct answer: B. Extra revenue from selling one more unit
- A. Revenue earned from selling total output
- B. Extra revenue from selling one more unit
- C. Revenue remaining after paying variable cost
- D. Revenue divided by the number of workers
Explanation
Marginal revenue is the change in total revenue caused by selling one additional unit of output. It is not the same as average revenue, which is total revenue divided by quantity. For a price-taking firm, marginal revenue equals the market price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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