CLEP Marketing Practice Exam 2025 - Free Marketing Practice Questions and Study Guide

Marginal revenue is defined as the change in revenue that results from selling one additional unit of a product. This concept reflects how much extra income a seller earns from increasing sales by one unit, providing vital insight into pricing and production decisions. Understanding marginal revenue helps businesses determine the optimal level of production where profit can be maximized.

In this context, the other definitions do not accurately capture the essence of marginal revenue. For instance, the reduction in total revenue due to increased production is not a direct representation of marginal revenue, as marginal revenue focuses on the addition rather than the loss. Similarly, revenue loss at various price points does not specifically relate to the incremental impact of selling an additional unit, while total revenue generated by the entire product line encompasses a broader scope that goes beyond the margins of individual units.