Applicability of the Marginal Revenue Derivation
A firm's total revenue (R) is given by the function R(Q) = P × Q, where P is the price and Q is the quantity sold. The marginal revenue (MR) is found by taking the derivative of the total revenue function with respect to Q. For a firm that is a 'price taker' in a perfectly competitive market, the price P is a constant value and does not change with the quantity the firm sells. Explain why the product rule of differentiation is not necessary to find the marginal revenue for this specific type of firm, and state what the marginal revenue is in this case.
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