Marginal Revenue Calculator

Calculate marginal revenue to optimize pricing strategies and maximize profits. Essential for understanding revenue changes from additional unit sales.

Calculate Marginal Revenue

Calculation Method

Change in Revenue Revenue Function Demand Function

New Total Revenue ($)

Revenue after selling additional units

Original Total Revenue ($)

Revenue before selling additional units

New Quantity Sold

Total units sold after increase

Original Quantity Sold

Total units sold before increase

Formula: MR = (New Revenue - Old Revenue) ÷ (New Quantity - Old Quantity)

Revenue Function Type

Linear: R = a × Q + b Quadratic: R = a × Q² + b × Q + c

Coefficient 'a'

Price per unit

Coefficient 'b'

Fixed revenue component

Quantity (Q)

Current quantity level

Formula: For R = a × Q + b, MR = a (constant)

Demand Function Type

Linear: P = a - b × Q Power: P = a × Q^(-b)

Intercept 'a'

Maximum price (when Q=0)

Slope 'b'

Price decrease per unit

Quantity (Q)

Current quantity level

Formula: For P = a - b × Q, MR = a - 2b × Q

Results

Marginal Revenue

$0.00

Revenue from next unit sold

Key Metrics

Current Price: $0

Current Revenue: $0

Quantity: 0

Average Revenue: $0

Revenue Analysis

MR vs Price: -

Revenue Trend: -

Elasticity: -

Optimization

Calculate to see optimization advice

Interpretation

Enter values to see marginal revenue analysis and pricing recommendations.

Revenue Analysis Chart

Understanding Marginal Revenue

Marginal Revenue (MR) is the additional revenue generated from selling one more unit of a product. It's a crucial concept in microeconomics for determining optimal production levels and pricing strategies.

Key Concepts

Marginal Revenue: Additional revenue from selling one more unit
Average Revenue: Total revenue divided by quantity (equals price)
Total Revenue: Price multiplied by quantity sold
Revenue Maximization: Occurs where marginal revenue equals zero

Marginal Revenue Formulas

Basic Formula: MR = ΔTR / ΔQ

Linear Demand: If P = a - bQ, then MR = a - 2bQ

Perfect Competition: MR = Price (constant)

Monopoly: MR < Price (decreasing)

Market Structures

Perfect Competition: MR = Price (horizontal demand curve)
Monopoly: MR < Price (downward sloping demand)
Monopolistic Competition: MR < Price but closer to price
Oligopoly: MR depends on competitors' reactions

Applications and Optimization

Profit Maximization

Rule: Maximize profit where Marginal Revenue = Marginal Cost (MR = MC)

If MR > MC: Increase production to boost profits
If MR < MC: Decrease production to boost profits
If MR = MC: Optimal production level achieved

Pricing Strategies

Price Discrimination: Different prices for different segments
Bundle Pricing: Selling products together
Dynamic Pricing: Adjusting prices based on demand
Penetration Pricing: Low initial prices to gain market share

Business Applications

Production Planning: Determining optimal output levels
Pricing Decisions: Setting prices to maximize revenue or profit
Market Analysis: Understanding demand elasticity
Investment Decisions: Evaluating expansion opportunities
Competitive Strategy: Responding to market changes

Limitations and Considerations

Assumes rational consumer behavior
May not account for external factors
Requires accurate demand estimation
Short-term vs. long-term considerations
Market dynamics and competition effects