Definition of Marginal Revenue
Marginal means additional, so marginal revenue will be the revenue that is derived from the sale of additional quantity. In other words, it is the ratio of change in revenue to change in quantity.
The formula for Marginal revenue is as follows:
The marginal revenue will be same if the price per unit is not changed and a straight line will be formed. By using the above formula the following table will give the marginal revenue of $10.
|
Units |
Sale revenue |
Marginal Revenue |
|
(Units x $10) |
(2 units revenue – 1 unit revenue) |
|
|
1 |
10.00 |
10.00 |
|
2 |
20.00 |
10.00 |
|
3 |
30.00 |
10.00 |
|
4 |
40.00 |
10.00 |
|
5 |
50.00 |
10.00 |
|
6 |
60.00 |
10.00 |
|
7 |
70.00 |
10.00 |
|
8 |
80.00 |
10.00 |
|
9 |
90.00 |
10.00 |
|
10 |
100.00 |
|
View More Cost Accounting Definitions
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