Economics Concepts: Marginal Revenue, Cost, Profit, and Revenue

Front

What is Marginal Revenue (MR)?

Back

Marginal Revenue (MR) is the additional revenue that a firm earns from selling one more unit of output. It reflects how total revenue changes with the sale of one additional unit of a good or service.

Front

What is Marginal Cost (MC)?

Back

Marginal Cost (MC) is the additional cost incurred by a firm when producing one more unit of output. It indicates the change in total cost that results from a one-unit increase in production.

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What is Profit?

Back

Profit is the financial gain a business makes from its operations after all costs have been subtracted from total revenue. Profit is what remains after covering both explicit and implicit costs.

Front

What is Total Revenue (TR)?

Back

Total Revenue (TR) is the total amount of money a firm receives from selling its goods or services. It is calculated by multiplying the price per unit by the quantity of units sold.

Front

What is Total Costs (TC)?

Back

Total Costs (TC) is the total amount of money a firm spends on producing goods or services. It includes both fixed and variable costs.

Front

What is the formula for Marginal Revenue (MR)?

Back

MR = ΔTR / ΔQ, where ΔTR = Change in Total Revenue and ΔQ = Change in Quantity of output.

Front

What is the formula for Marginal Cost (MC)?

Back

MC = ΔTC / ΔQ, where ΔTC = Change in Total Cost and ΔQ = Change in Quantity of output.

Front

What is the formula for Total Revenue (TR)?

Back

TR = Price (P) × Quantity (Q).

Front

What is the formula for Total Costs (TC)?

Back

TC = Total Fixed Costs (TFC) + Total Variable Costs (TVC).

Front

What is the formula for Profit (P)?

Back

P = Total Revenue (TR) − Total Costs (TC).