When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly sets its price at $10 it sells 60 units. The marginal revenue for the firm over this range is
A)$11.
B)$22.
C)$33.
D)$44.

Question

Quizplus · Accepted Answer

To find the marginal revenue, we need to find the change in total revenue when the quantity sold changes by one unit. Using the midpoint method, we get:

$8 price: midpoint quantity = (64-0)/2 + 0 = 32
$10 price: midpoint quantity = (60-64)/2 + 64 = 62

So, the change in quantity is 62-32=30. The change in total revenue is $10 x 60 - $8 x 64 = $600 - $512 = $88. Therefore, the marginal revenue is:

MR = $88/30 = $44/15

Therefore, the best choice is B, $22.

When a Certain Monopoly Sets Its Price at $8 It