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By using a derivative, you can take a supply function and determine the marginal revenue at any given quantity of product.

Marginal revenue is the incremental gain produced by selling an additional unit. It follows the law of diminishing returns, eroding as output levels increase.

Put it together, and the marginal revenue derivative is $20 - (q / 5). So if you make 50 units of a product, the marginal revenue derivative will be $20 - 50 / 5, or $10.

Learn about the marginal cost of production and marginal revenue and how the two measures are used together to determine the profit maximization point.

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Written by How to Calculate a Marginal Revenue Derivative for The Motley Fool -> One key decision every business has to make is how much of its goods or services to make available to customers.