Use the following to answer question:
-(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,their total revenue changes from _____ to _____.
A)$88;$100
B)$22;$20
C)$88;$80
D)$110;$100

Question

Use the following to answer question: 
-(Table: Prices and Demand)The New Orleans Saints have a monopoly on Saints logo hats.The marginal cost of producing a hat is $18.If the Saints increase the number of hats they sell from 4 to 5,their total revenue changes from _____ to _____.
A)$88;$100 
B)$22;$20 
C)$88;$80 
D)$110;$100

Quizplus · Accepted Answer

The marginal revenue of selling an additional hat is the change in total revenue from selling one more hat. If the marginal cost is $18, and they decide to produce that additional hat, it implies they are making a profit on that hat, suggesting the price is above $18. The only option where total revenue increases by the price of a single hat or more (indicating a price per hat of more than $18) is from $88 to $100, which is an increase of $12, suggesting the sale price of the hat is at least $30 ($18 marginal cost + $12 increase in revenue).

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