what is marginal revenue 
marginal revenue is the increase in revenue that results from the sale of one additional unit of output while marginal revenue can remain constant over a certain level of output it follows the law of diminishing returns and will eventually slow down as the output level increases in economic theory perfectly competitive firms continue producing output until marginal revenue equals marginal cost investopedia laura porterunderstanding marginal revenuemarginal revenue is a financial and economic calculation that determines how much revenue a company earns for each additional unit sold as the price of a good is often tied to market supply and demand a company s marginal revenue often varies based on how many units it has already sold marginal revenue is useful in several contexts companies use historical marginal revenue data to analyze customer demand for products in the market they also use the information to set the most effective and efficient prices lastly companies rely on marginal revenue to better understand forecasts this information is used to determine future production schedules such as material requirements planning ideally the change in measurements captures the change from a single quantity to the next available quantity i e the difference between the one hundredth and one hundred first units sold however you can still use it to capture the average marginal revenue across a series of units i e the difference between the hundredth and one hundred fifteenth units sold 