Question

What is theproducers often work to maximize their and make them as large as possible. best definition of marginal revenue?

a. the possible income from producing an additional item
b. the price of producing one additional unit of a good
c. the additional income gained from selling an additional good
d. the financial gain from business activity minus expenses

Answer 1

Marginal revenue is the additional income gained from selling one more unit of a product. It plays a vital role in understanding the profitability of increasing production and total profit is maximized when marginal revenue equals marginal cost. The correct option is c. the additional income gained from selling an additional good

Step-by-step explanation:

The best definition of marginal revenue is c. the additional income gained from selling an additional good. This concept is crucial for producers, as it helps them understand the profitability of selling one more unit of their product. Marginal revenue is calculated by the change in total revenue that results from selling an additional unit.

For instance, if a monopolist wants to maximize profits, they should continue producing as long as the marginal revenue exceeds the marginal cost.

This is because the marginal cost of producing an additional unit can be compared with the marginal revenue to determine if the additional unit is contributing to total profit or not. Total profit is maximized when marginal revenue equals marginal cost, which indicates the most profitable quantity of output to produce. The correct option is c. the additional income gained from selling an additional good