The change in total revenue that results from selling one more unit of output is called:

• A. Average revenue
• B. Incremental revenue
• C. Marginal revenue
• D. Total revenue

Answer: (C)

Verified step by step guidance

1. Understand the concept of total revenue (TR), which is the total amount of money a firm receives from selling its output. It is calculated as \(TR = P \times Q\), where \(P\) is the price per unit and \(Q\) is the quantity sold.
2. Recognize that average revenue (AR) is the revenue earned per unit sold, calculated as \(AR = \frac{TR}{Q}\). This tells us the average amount received for each unit but does not measure the change from selling one more unit.
3. Identify that incremental revenue is a general term referring to the additional revenue from an increase in sales, but in microeconomics, the precise term for the change in total revenue from selling one more unit is marginal revenue.
4. Define marginal revenue (MR) as the change in total revenue resulting from selling one additional unit of output. Mathematically, it is expressed as \(MR = \frac{\Delta TR}{\Delta Q}\), where \(\Delta TR\) is the change in total revenue and \(\Delta Q\) is the change in quantity (usually 1 unit).
5. Conclude that marginal revenue is the correct term for the change in total revenue from selling one more unit, distinguishing it from average revenue and total revenue.