Table 15-4
A monopolist faces the following demand curve:
-Refer to Table 15-4. If the monopolist increases production from 7.5 to 10 units, what is its marginal revenue?
A)$12.50
B)$5
C)-$5
D)-$12.50

Question

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist increases production from 7.5 to 10 units, what is its marginal revenue?
A)$12.50 
B)$5 
C)-$5 
D)-$12.50

Quizplus · Accepted Answer

To find the marginal revenue, we need to find the change in total revenue when production is increased from 7.5 to 10 units.

At 7.5 units, the price is $27 and the total revenue is 7.5 x $27 = $202.50.

At 10 units, the price is $20 and the total revenue is 10 x $20 = $200.

The change in total revenue is $200 - $202.50 = -$2.50.

Therefore, the marginal revenue of increasing production from 7.5 to 10 units is -$2.50, and the correct answer is C.

Table 15-4 A Monopolist Faces the Following Demand Curve