Final answer:
Total revenue is calculated by multiplying the price per unit by quantity sold, and marginal revenue is found by dividing the change in total revenue by the change in quantity. For costs, marginal cost is the change in total cost divided by change in quantity, and average cost is total cost divided by quantity.
Step-by-step explanation:
To determine total revenue (TR) and marginal revenue (MR) at each possible level of sales, we first calculate TR by multiplying the price per unit by the quantity sold. For example, if a firm sells 5 units at $10 each, TR would be $50. To find MR, we calculate the change in total revenue that results from selling one additional unit. If selling a sixth unit increases TR to $59, then the MR for the sixth unit is $9 (the change in TR of $9 divided by the change in quantity of 1).
Similarly, we can calculate marginal cost (MC) by dividing the change in total cost by the change in quantity, and average cost (AC) by dividing total cost by quantity. These figures are crucial for a firm to determine how much of their product to supply and at what price, especially for monopolistic competitors and monopolists who look for the profit-maximizing level of output where MR equals MC.