$\begin{array}{lll}
\text { Quantity } &\text {Price } &\text { Total cost }\
\hline1 & \$ 500 & \$ 400 \
2 & 450 & 650 \
3 & 400 & 950 \
4 & 350 & 1,300 \
5 & 300 & 1,700
\end{array}$
Table 24.1
Hypothetical Monopoly Costs and Revenue In Table 24.1, marginal revenue at the profit-maximizing level of output is
A) $150.00
B) $250.00
C) $300.00
D) $550.00

Question

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue divided by the change in quantity. In this case, the profit-maximizing level of output is 3 units. The total revenue at 3 units is $950. The total revenue at 2 units is $650. Therefore, the marginal revenue at 3 units is ($950 - $650) / (3 - 2) = $300.

Table 241 Hypothetical Monopoly Costs and Revenue in Table 24

Table 241
Hypothetical Monopoly Costs and Revenue in Table 24