Marginal Revenue Calculator

Marginal revenue (MR) is the additional total revenue earned from selling one more unit of output. The formula is MR = ΔTR / ΔQ, the change in total revenue (TR) divided by the change in quantity (Q) between two sales points. Example: total revenue rises from $5,000 at Q=100 to $5,400 at Q=110, so MR = ($5,400 − $5,000) / (110 − 100) = $400 / 10 = $40 per additional unit. This figure is descriptive — it describes the revenue pattern in the data you enter, not a business decision recommendation.

Marginal revenue (MR) measures the revenue of an ADDITIONAL unit (ΔTR/ΔQ), while average revenue (AR) measures the revenue PER unit of all output: AR = TR / Q. In the example above, AR1 = $5,000/100 = $50 and AR2 = $5,400/110 = $49.09 — while MR = $40, lower than both. MR answers "how much extra comes in from the last unit"; AR answers "how much does each unit earn on average". Both are computed automatically in this calculator's basic mode.

Not always — that only happens under perfect competition. In a perfectly competitive market, the firm is a price taker: each additional unit sells exactly at the market price, so MR = price and is constant. In markets with market power (monopoly, oligopoly), selling more usually requires lowering the price, so additional units add less revenue than their selling price — MR falls as Q rises and sits below the demand curve. This calculator does not assume any particular market structure; it computes MR purely from the TR and Q data you provide.

There is a fixed relationship through the formula MR = P × (1 + 1/e), with e = price elasticity of demand (negative). When demand is elastic (|e| > 1), MR is positive — more sales raise total revenue. When demand is unitary (|e| = 1), MR = 0 — total revenue is at its maximum. When demand is inelastic (|e| < 1), MR is negative — more sales actually lower total revenue. This calculator's table mode helps you see in which increment MR changes sign, reflecting the elasticity-zone shift in your data.

Negative MR means selling additional units LOWERS total revenue: the price effect on all units outweighs the additional revenue from the extra units. Descriptively, this marks that the maximum point of total revenue has already been passed in that data. Table mode flags negative-MR increments in red and reports the quantity where TR peaks. This is a data-pattern reading, not a judgment of whether the sales decision was right.

Descriptively, the condition MR = MC is known as the first-order condition for profit maximization: expanding output still adds profit while MR > MC, and shrinking output adds profit while MR < MC. This calculator's "MR vs MC" mode flags the increments where MR = MC occurs and computes incremental profit (MR − MC) × ΔQ per increment from your data. Note the boundary: this tool COMPUTES the revenue side from revenue data. To compute MC from total cost data, use the marginal cost calculator. To measure market power from price and marginal cost with the formula L = (P − MC)/P, use our Lerner Index calculator.

Choose one of four modes: (1) Basic MR — enter (TR1, Q1) and (TR2, Q2) to get MR with ΔTR/ΔQ steps plus AR1 and AR2; (2) Multi-point table — paste a Q,TR data series (one point per line) to see MR per increment, the rising/falling trend, lowest/highest MR, negative-MR increments, and the TR peak; (3) MR vs MC — enter a Q,TR series plus MC (a single fixed figure or one figure per increment) to flag where MR = MC occurs along with incremental profit per increment; (4) Solver — find TR2 from a targeted MR & ΔQ, or find Q2 from MR & TR2. All calculations run in your browser.