Which term refers to the additional revenue that an extra unit of output would add to total revenue?

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

Answer: (A)

Verified step by step guidance

1. Understand the concept of revenue in microeconomics: Total revenue is the overall income a firm receives from selling its goods or services.
2. Recognize that average revenue is the revenue earned per unit of output, calculated as total revenue divided by quantity sold.
3. Identify that net revenue typically refers to total revenue minus costs or expenses, not the additional revenue from one more unit.
4. Focus on the term that describes the additional revenue generated by selling one more unit of output, which is called marginal revenue.
5. Recall the formula for marginal revenue: \(\text{Marginal Revenue} = \frac{\Delta \text{Total Revenue}}{\Delta \text{Quantity}}\), where \(\Delta\) denotes a change.