What does marginal revenue represent in economic terms?

Marginal revenue represents the change in total revenue that results from producing and selling one additional unit of a good or service. This concept is critical in microeconomics as it helps firms determine the optimal level of production to maximize their profits. When a company understands its marginal revenue, it can make informed decisions about whether to increase or decrease production based on whether the revenue from additional sales exceeds the costs associated with producing those units. Therefore, the correct identification of marginal revenue as the change in total revenue from an additional unit aligns perfectly with its foundational role in profit maximization strategies. It allows businesses to assess the financial impact of their production decisions effectively.