For a monopolist, marginal revenue equals Multiple Choice Price. Price times quantity. The change in total...

For a monopolist, marginal revenue equals

Multiple Choice Price. Price times quantity. The change in total revenue divided by the change in quantity. The change in quantity divided by the change in total revenue

Expert Solution

Marginal revenue is the additional revenue generated when a monopoly sells one more unit of output. It plays a very important role in the profit maximization in relation to marginal cost. The profit is maximized by equating the marginal revenue generated from production with the marginal cost. If these two marginals are not equal, then profit can be increased by producing more or less output

It is the change in total revenue resulting from a change in the quantity of output sold. Marginal revenue indicates how much extra revenue a monopoly receives for selling an extra unit of output. It is found by dividing the change in total revenue by the change in the quantity of output. The marginal revenue generated depends on the market structure.

The formula of marginal revenue is as below:

Marginal Revenue= Change in Total revenue/ Change in Quantity (The change in total revenue divided by the change in quantity)

Rahul Sunny answered 1 year ago

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