# How do u find marginal revenue?

Oct 31, 2015

Marginal Revenue is the difference between present total revenue and the previous total revenue. It is an addition made to the total revenue.

#### Explanation:

Marginal Revenue is the additional revenue made to the total revenue from the sale of one more unit of a good.

When the sale increase from 2 units to 3 units. The TR increases from $.36 to$.48. The additional revenue made to the total revenue is $.12. MR of the 3rd unit is$.12.

The Formula to calculate MR is -

$M {R}_{n} = T {R}_{n} - T {R}_{n - 1}$
$M {R}_{3} = T {R}_{3} - T {R}_{3 - 1}$
$M {R}_{3} = T {R}_{3} - T {R}_{2}$
$M {R}_{3} = 48 - 36 = 12$

There is another formula also -

$M R = \frac{\Delta \left(T R\right)}{\Delta Q}$

When the sales moves from 4 units to 5 units $\Delta Q = 1$, and $\Delta T R = \left(60 - 56\right) = 4$

MR of the 5th unit is $M R = \frac{4}{1} = 4$