1.

Explain the relationship between marginal revenue and average revenue using diagram

Answer»

Marginal revenue is the addition to total revenue by selling one more unit of the commodity.

Algebraically it is the total revenue earned by selling ‘n’ units of the commodity instead of n-1. Thus,

MRn = TRn – TRn-1; where MRn = Marginal revenue of the nth unit 

TRn = Total revenue of n units

TRn-1 = Total revenue of n-1 units



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