Marginal Revenue

The additional revenue a firm earns from selling an additional unit of output.

For example, a bakery producing cakes has a total revenue of U.S. $0, when it doesn't produce any output. The revenue it sees from producing its first cake is U.S. $15, bringing marginal revenue to U.S. $15 ($15 in total revenue/1 unit of product). If the revenue from selling two cakes is U.S. $25, the marginal revenue gained by selling the second cake is $10 (change in total revenue: $25-$15=$10 from the additional cake).

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