Home » What is the mathematical formula for how marginal revenue changes with quantity sold?

What is the mathematical formula for how marginal revenue changes with quantity sold?

##lim_(DeltaQ rarr 0) (DeltaTR)/(DeltaQ) = (d(TR))/(dQ)##
Note in practice quantity increments in discrete numbers so:
##(DeltaTR)/(DeltaQ)## maybe more practical
In real life here is what you may see:

  1. Total Revenue = (Current Price Per Product) x (Current Number Products Sold)
    ##=>TR_1 = P_1xxQ_1##
  2. Consider lower Alternate Price and determine Alternate Number Products Sold at this price. This step may require specific market analysis.
  3. Alt Revenue = (Alt Price) x (Alternative Products Sold) ##=>TR_2 = P_2xxQ_2##
  4. Marginal Revenue, ##MR = |(TR_1-TR_2)/(Q_1 – Q_2)|##

The total revenue (TR) received from the sale of Q goods at price P is given by ##TR = P*Q##. Now the Marginal Revenue (MR) can be defined as the additional revenue added by an additional unit of output. In other words marginal revenue is the extra revenue that an additional unit of product will bring a firm. It can also be described as the change in total revenue divided by the change in number of units sold. It is possible to write MR as a derivative, in fact more formally, marginal revenue is equal to the change in total revenue over the change in quantity: ##MR = (DeltaTR)/(DeltaQ)## when the change in quantity is increment in discrete units (say one). Obviously in the limit we can write:
##lim_(DeltaQ rarr 0) (DeltaTR)/(DeltaQ) = (d(TR))/(dQ)##
Marginal revenue is the derivative of total revenue with respect to demand.

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10