Marginal revenue, and maximizing revenue & average revenue - Derivative Applications

Marginal revenue, and maximizing revenue & average revenue

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Notes:
Marginal Revenue (MR) is the additional revenue that is gained when you increase the unit by one. It is also the derivative of the revenue function. In other words,
MR=R(q)MR=R'(q)

Average Revenue (AR) is the amount of revenue generated per unit. In other words,
AR(q)=R(q)qAR(q)=\frac{R(q)}{q}
In this section, we would want to find the quantity qq, which maximizes revenue and average revenue. To maximize revenue, we would want to solve for:

MR=0MR=0

To maximize average revenue, we would want to solve for:

AR(q)=0AR'(q)=0
  • 1.
    Marginal Revenue, and Maximizing Revenue & Average Revenue Overview:
  • 2.
    Finding & Maximizing Revenue
    Given the following information, find the marginal revenue and the value of qq which maximizes the revenue:
  • 3.
    Finding & Maximizing Average Revenue
    Given the following information, find the marginal average revenue and the value of qq which maximizes the average revenue:
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Marginal revenue, and maximizing revenue & average revenue

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