The Marginal Revenue

EGT1-309.1.1.06

The marginal revenue of a company is the added revenue that would be gained by selling 1 more unit of a product. It is also the unit revenue that the most recent unit sold has made for the company. The added revenue made by selling the additional unit of a product is equal to the price that the company would be able to charge a buyer.

The marginal revenue, which is the increase in the overall total revenue, is a price that the company collects on the additional sold unit, minus the revenue that is lost by the reduction of the price on all additional units that were previously sold prior to the lower pricing on the unit. It makes the link between the overall total revenue and the marginal revenue one that is totally mathematical. The formula for total revenue is total revenue (T.R) = price$ X quantity.

The marginal cost is straightforwardly related to total cost because the marginal cost is the change in the total cost of a 1 unit that can be manufactured. In view of the fact that total cost is the summation of the fixed cost and that of the variable cost, the marginal cost directly affects the variable cost of the item which would change the total cost-effective rate of the what it would cost to produce a product.

The total cost would be the variable cost and fixed cost added together.

T.C.=V.C.+F.C.

To get the average total cost you would divide total cost by the quantity of the total number produced.

A.T.C=T.C./Q.

The average total cost is helpful for a company who wants to look that the overall efficiency at various output or when modifying different things in the production process.

In marginal cost the "margin" is the end or the last. The marginal unit is what it would cost to produce 1 more unit of a product. The marginal cost would be part of the average total cost for each unit.

Profit is the financial gain that is made once the total of revenue aquired from a business doings exceed all of the combined expenses, along with the costs and the various taxes required to carry on the activity. It can be calculated as the Total Revenue- the Total Expenses= The Profit. The optimal profit is the short or long run procedure where a company decides the pricing for a good and optimal output that gives the greatest profit.

In order to earn the maximum profits, a company should continue producing when the last unit produced makes positive profit. MR=MC Marginal revenue = Marginal costs.

Profit maximization is what a business uses to determine a particular price and a the optimal output level for a specific item to create the maximum profits. A profit maximizing firm would be able to decide its optimal level of output by subtracting the decided marginal