For a firm with market power, the marginal revenue from producing an additional unit of a good is not equal to the good’s price. When the firm decides to increase production from point x on the demand curve (quantity Q₁) to point y (Q₂), the price of the good decreases from P to P. The firm’s initial total revenue (P₁ × Q₁) is equal to the area A + B. At the new production point, total revenue (P₂ × Q₂) is equal to the area B + C. The firm’s marginal revenue is the difference between the initial total revenue and the new total revenue, equal to C – A.