Marginals

If R(x),C(x) and P(x) represent the revenue, cost and profit functions respectively, where x denotes the number of units to be produced (or sold) then we have the following

P(x) = R(x) - C(x)

We call and marginal revenue, marginal cost and marginal profit respectively. From the rule of derivatives, we have P'(x) = R'(x) - C'(x)

 
• Important concept