Find marginal revenue — the extra revenue earned from selling one more unit — from two total-revenue and quantity data points.
How it works
Marginal revenue is the change in total revenue divided by the change in quantity: MR = (TR₂ – TR₁) ÷ (Q₂ – Q₁). Revenue rising from $4,000 to $5,000 as quantity rises from 100 to 120 units gives a marginal revenue of $50 per unit.
What this does not include
This calculates marginal revenue between two specific points, an average rate over that range — not the instantaneous marginal revenue at a single quantity, which in calculus terms is the derivative of the revenue function.
How to use this calculator
- Enter total revenue before and after.
- Enter quantity before and after.
A worked example
Total revenue rising from $4,000 to $5,000 as quantity rises from 100 to 120: marginal revenue = (5,000−4,000)/(120−100) = $50 per unit.
What the variables mean
| Variable | Meaning |
|---|---|
| TR1, Q1 | Total revenue and quantity at the starting point |
| TR2, Q2 | Total revenue and quantity at the new point |
Edge cases worth knowing
Marginal revenue is the revenue from the next unit, not average revenue per unit. A business can have high average revenue per unit while marginal revenue on additional units is much lower, especially as prices are cut to sell more.
Equal quantities make marginal revenue undefined — with no change in units sold, there’s no “next unit” to measure the added revenue from.
Why does marginal revenue matter for pricing decisions?
A profit-maximizing firm produces up to the point where marginal revenue equals marginal cost — producing beyond that point costs more to make than it earns in revenue.
Can marginal revenue be negative?
Yes — if increasing quantity sold requires cutting price so much that total revenue actually falls, marginal revenue turns negative, a signal that further expansion is unprofitable.
How is marginal revenue related to demand elasticity?
A firm facing elastic demand generally sees marginal revenue stay positive as it sells more; under inelastic demand, marginal revenue can turn negative sooner.
