Marginal Revenue is the revenue realised by selling additional units of a product.
Mathematically, Marginal Revenue can be expressed as,
[tex]MR =\frac{Change\:in\: Total\:Revenue}{Change\:in\:Quantity}[/tex]
Let old Quantity be [tex]Q_1[/tex] and new Quantity be [tex]Q_2[/tex]
Since 500 units were produced first,
[tex]Q_1=500[/tex]
And now 100 additional units will be produced, So
[tex]Q_2=500+100=600[/tex]
Now Change in Quantity produced is
[tex]Q_2-Q1=600-500=100[/tex]
Now we need to calculate for the Change in Total Revenue
We also let the initial total revenue be
[tex]TR_1[/tex].
Initially 500 units were sold for $4 per unit. This implies that,
[tex]TR_1=4\times500[/tex].
=$2,000
We were given the current total revenue to be $3,000.
This implies that, our change in total revenue
[tex]TR_2- TR_1=3,000-2,000=1,000[/tex].
Hence our Marginal Revenue
[tex]MR =\frac{1,000} {100}[/tex]
[tex]MR =10[/tex]
Hence the Marginal Revenue is $10.
