Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The additional revenue gained from selling one more unit of a product
B
The total revenue divided by the number of units sold
C
The fixed cost of production per unit
D
The total profit made by the firm
Understanding the Answer
Let's break down why this is correct
Answer
Marginal revenue is the extra money a firm earns from selling one more unit of a product. It helps businesses decide how to set their prices and how much to produce. For example, if a company sells 10 toys for $10 each, it earns $100. But if selling an 11th toy increases total earnings to $108, the marginal revenue from that extra toy is $8. Understanding this helps firms determine the best level of production to maximize profits while considering how their pricing affects sales.
Detailed Explanation
Marginal revenue is the extra money a company makes when it sells one more item. Other options are incorrect because This option confuses total revenue with marginal revenue; This choice talks about fixed costs, which are expenses that don't change with production.
Key Concepts
Marginal Revenue
Topic
Marginal Revenue and Profit Calculations
Difficulty
easy level question
Cognitive Level
understand
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