The table below presents the price and output schedule for a firm: | Output (Q) | Price (\text{₦}) | Total Revenue (\text{₦}) | |---|---|---| | 1 | 20 | 20 | | 2 | 18 | 36 | | 3 | 16 | 48 | | 4 | 14 | 56 | | 5 | 12 | 60 | What is the marginal revenue derived from expanding output from 3 units to 4 u

The table below presents the price and output schedule for a firm: | Output (Q) | Price (\… — JAMB UTME

The table below presents the price and output schedule for a firm:

What is the marginal revenue derived from expanding output from $3$ units to $4$ units?

The marginal revenue derived from expanding output from 3 units to 4 units is

\text{₦}8

Marginal revenue (

MR

) is defined as the change in total revenue divided by the change in total quantity (

MR = \Delta TR / \Delta Q

). At

Q = 3

, Total Revenue is

\text{₦}48

. At

Q = 4

, Total Revenue increases to

\text{₦}56

. The addition to total revenue is

\text{₦}56 - \text{₦}48 = \text{₦}8

Identify Total Revenue at 3 units (

TR_3

)

TR_3 = \text{₦}48

To establish the total revenue earned before producing and selling the additional unit.

Identify Total Revenue at 4 units (

TR_4

)

TR_4 = \text{₦}56

To establish the new total revenue after selling the 4th unit.

Calculate Marginal Revenue (

MR

) using

MR = \frac{\Delta TR}{\Delta Q}

MR = \text{₦}56 - \text{₦}48 = \text{₦}8

Marginal revenue measures the additional revenue generated by selling one more unit of output.

Marginal Revenue Calculation and Relationship to Total Revenue

Estimated Time:1m 0s