Marginal Analysis Essay Example | Topics and Well Written Essays - 500 words - 1

Marginal Analysis - Essay Example Please revise with a more specific explanation. Please revise to include a clear and direct relationship between marginal revenue and total revenue. B.1. The submission does not provide an adequate explanation of the relationship between marginal cost and total cost. Please revise to include a clear and direct relationship between marginal cost and total cost. F.1. The essay does not clearly explain what a firm would do with respect to output decisions if marginal revenue is less than marginal cost. Please revise to address whether the firm should increase or decrease production. Definition. Marginal revenue is defined as the additional revenue obtained from selling one more unit of the good that he produces (William Boyes and Melvin, Michael, 2002, p. 202-205). To better understand it, let us present it in the form of a graph.(see graph l) We have here a demand graph showing the quantity of a certain item the consumers are willing to buy at a certain price. At price of $10, people are willing to buy 100 pcs. Total revenue $1000 It is blue area under the demand curve. People will not buy more if the price is increased, and in order to sell more, price must be dropped. It is important to be aware of the demand curve to understand the marginal revenue because it will show how much the producer needs to lower the price in order to sell another item. Demand curve is the slope going down (D) The relationship that exists between the two is the additional revenue that is given by producing another unit of production. It can further be related as the unit revenue the last item has sold , or how much is the contribution to revenue of the last item sold The causaL relationship that exist is for each item sold, marginal profit = marginal revenue – marginal cost. And if MR IS greater than MC at a certain point of output, then profit is positive; and the same relationship exists when MR is less than MC result is