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Learn about the marginal cost of production and marginal revenue and how the two measures are used together to determine the profit maximization point.
Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. While marginal revenue can remain constant over a certain level of output, it follows...
Understand the concepts of marginal revenue and marginal cost in microeconomics with this Khan Academy video.
To compare marginal cost vs. marginal revenue, it's helpful to understand how these two numbers behave in relation to one another: If marginal cost and marginal revenue are equal, your business has reached its optimal production level.
Marginal revenue (MR) represents the extra income generated by selling an additional unit of a product or service. It helps businesses understand how total revenue changes due to changes in quantity sold. Conversely, Marginal cost (MC) signifies the extra expense involved in producing an additional unit.
What is the difference between marginal cost and marginal revenue? Marginal cost is the additional cost of producing one more unit, while marginal revenue is the additional revenue from selling one more unit.
In economics, marginal cost is the change in total production cost that comes from making or producing one additional unit. To calculate marginal cost, divide the change in production costs...
The profit maximizing output produced is determined where the marginal revenue line intersects the marginal cost curve. The formula for marginal cost is: Marginal cost = change in total cost/change in quantity
The Profit Maximization Rule states that if a firm chooses to maximize its profits, it must choose that level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR) and the Marginal Cost curve is rising. In other words, it must produce at a level where MC = MR.
Understanding marginal cost and revenue will help you to understand the perfect balance between making enough to meet your customer growth demands without creating an overproduction problem.