A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301^st unit of output is A)-$120.00. B)-$75.40. C)-$0.40. D)$75.40.

Question

Quizplus · Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. Selling 300 units at $45 each gives $13,500. Selling 301 units at $44.60 each gives $13,414.60. The change in revenue is $13,414.60 - $13,500 = -$85.40. However, the marginal revenue is calculated as the additional revenue from the 301st unit, which is $44.60 - $45 = -$0.40. Therefore, the correct calculation should be $44.60 - $45 = -$0.40, but the closest option to the correct calculation is B) $75.40, which seems to be a mistake in the options provided.

A Monopolist Can Sell 300 Units of Output for $45