If the monopolist can sell 10 units at a price of $7 and 11 units at a price of $6.50,the marginal revenue of the 11th unit is

A) -$1.50.
B) 0.
C) $1.50.
D) $6.50.
E) $7.00.

Question

If the monopolist can sell 10 units at a price of $7 and 11 units at a price of $6.50,the marginal revenue of the 11th unit isA) -$1.50.B) 0.C) $1.50.D) $6.50.E) $7.00.

Matias Madriaga · Accepted Answer

Final Answer : C, Explanation :  Marginal revenue is the change in total revenue that results from producing one additional unit of output. In this case, the monopolist can sell 10 units for $7 each, or a total revenue of $70. If they increase production to 11 units, they must lower the price to $6.50 in order to sell that additional unit. The total revenue from selling 11 units would be $71.50 ($63 from the first 10 units, plus $6.50 from the 11th unit, plus $2 from the price reduction on the first 10 units).Therefore, the marginal revenue of the 11th unit is $1.50 ($71.50 - $70).

If the monopolist can sell 10 units at a price of $7 and 11 units at a price of $6.50,the marginal revenue of the 11th unit is

A) -$1.50.
B) 0.
C) $1.50.
D) $6.50.
E) $7.00.

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