w to calculate the marginal revenue produce

1 answer

To calculate the marginal revenue produced, you need to gather data on the total revenue produced at different output levels. Here are the steps to calculate marginal revenue:

1. Determine the total revenue at different levels of output. For example, if you have the following data:

Level of Output (Q) | Total Revenue (TR)
----------------------------------
1 | 10
2 | 18
3 | 24
4 | 28

2. Calculate the change in total revenue (∆TR) between consecutive levels of output. In this example, the changes in total revenue are:

∆TR(1-2) = 18 - 10 = 8
∆TR(2-3) = 24 - 18 = 6
∆TR(3-4) = 28 - 24 = 4

3. Calculate the change in quantity (∆Q) between the corresponding levels of output. In this example, the changes in quantity are:

∆Q(1-2) = 2 - 1 = 1
∆Q(2-3) = 3 - 2 = 1
∆Q(3-4) = 4 - 3 = 1

4. Calculate the marginal revenue (MR) by dividing the change in total revenue (∆TR) by the change in quantity (∆Q). In this example:

MR(1-2) = ∆TR(1-2)/∆Q(1-2) = 8/1 = 8
MR(2-3) = ∆TR(2-3)/∆Q(2-3) = 6/1 = 6
MR(3-4) = ∆TR(3-4)/∆Q(3-4) = 4/1 = 4

Therefore, the marginal revenue produced at each level of output is 8, 6, and 4, respectively.