Question

Revenues that change in response to a particular course of action are referred to as ______________ revenues.

a) Differential revenues

b) Marginal revenues

c) Contribution margin revenues

d) All of the above

Answer 1

Marginal revenue is the change in total revenue divided by the change in quantity. A change in perceived demand will shift the marginal revenue curve for a firm in a monopolistically competitive industry.

Step-by-step explanation:

Marginal revenue is the change in total revenue divided by the change in quantity. A change in perceived demand will change total revenue at every quantity of output and in turn, the change in total revenue will shift marginal revenue at each quantity of output. When there is an entry or exit in a monopolistically competitive industry, the perceived demand curve for each firm will shift, causing a corresponding shift in the marginal revenue curve.