Marginal Revenue

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Definition of Marginal Revenue:

Marginal revenue is the change in total revenue derived from selling one additional unit of a good or service.

Detailed Explanation:

When the marginal benefit is money, economists use the term marginal revenue.  Assume a grocery store normally sells a gallon of milk for $3. A tropical storm is anticipated within 48 hours. People are flocking to the store to stock up on groceries. The manager seizes the opportunity and raises his price to $4 per gallon. The marginal revenue, or the revenue from his next sale, equals $4 per gallon.  (See Marginal Benefit.)

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