First, calculate the marginal return, or the additional revenue brought in from one additional unit of production. In most cases, the marginal return (or marginal revenue) is equal to the selling price of the item. A company receives the dollar amount of the price in new revenue by producing that one item.Second, calculate the marginal cost, or what a company must spend to produce an additional unit. The marginal cost would include all the variable expenses that go into producing that additional unit, such as extra materials or hours or labor.Finally, divide the marginal revenue by the marginal cost to get your marginal rate of return. For instance, if a good has a price, or marginal revenue, of $50, and a marginal cost to produce of $10, then the marginal rate of return is five ($50/$10).
First, calculate the marginal return, or the additional revenue brought in from one additional unit of production. In most cases, the marginal return (or marginal revenue) is equal to the selling price of the item. A company receives the dollar amount of the price in new revenue by producing that one item.<br><br>Second, calculate the marginal cost, or what a company must spend to produce an additional unit. The marginal cost would include all the variable expenses that go into producing that additional unit, such as extra materials or hours or labor.<br><br>Finally, divide the marginal revenue by the marginal cost to get your marginal rate of return. For instance, if a good has a price, or marginal revenue, of $50, and a marginal cost to produce of $10, then the marginal rate of return is five ($50/$10).
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