Marginal Revenue: The change in total revenue with respect to a small change in demand of an item is called marginal revenue.
- x = Demand of an item, p = Price of an item, then total revenue R = x . p
- Marginal revenue is obtained by finding derivative of R with respect to x.
Thus, marginal revenue = \(\frac{dR}{dx}\)
Marginal Cost:
- The change in total cost with respect to a small change in production is called marginal cost.
- x = Production of an item, C = Production cost, then finding derivative of C with respect to x, marginal cost is obtained.
Thus, marginal cost =\(\frac{ dC}{dx}\)
