The marginal revenue is the:

• A. additional revenue generated from selling one more unit of output
• B. total revenue divided by the number of units sold
• C. additional cost incurred from producing one more unit of output
• D. difference between fixed cost and variable cost

Answer: (A)

Verified step by step guidance

1. Understand the concept of marginal revenue (MR): it represents the additional revenue a firm earns by selling one more unit of output.
2. Recall that total revenue (TR) is the total amount of money received from selling a certain quantity of goods, calculated as price times quantity sold.
3. Marginal revenue is not the average revenue (which is total revenue divided by quantity), but the change in total revenue when quantity increases by one unit.
4. Formally, marginal revenue can be expressed as the derivative or difference: \(MR = \frac{\Delta TR}{\Delta Q}\), where \(\Delta TR\) is the change in total revenue and \(\Delta Q\) is the change in quantity (usually 1 unit).
5. Compare the given options with this definition to identify that marginal revenue is the additional revenue generated from selling one more unit of output.