Which term is used to describe the additional revenue that comes from selling one more unit of a product?

The term that describes the additional revenue generated from selling one more unit of a product is marginal revenue. This concept is crucial in economics and business decision-making, as it helps firms determine the optimal output level to maximize profits. Marginal revenue is calculated by taking the change in total revenue brought about by the sale of one additional unit.

Understanding marginal revenue is key to pricing strategies and production decisions. For instance, if the marginal revenue from selling an additional unit is greater than the marginal cost of producing that unit, it makes sense for a company to increase production. Conversely, if the marginal revenue falls below marginal cost, it indicates that producing additional units may not be profitable.

While terms like total income, net profit, and average revenue are related to a business's financial performance, they do not specifically refer to the incremental revenue derived from the sale of one additional unit. Total income encompasses all revenue, net profit addresses overall profitability after costs, and average revenue refers to the revenue per unit sold. Therefore, marginal revenue is the most precise term for this scenario.