Suppose that a pure monopolist can sell 47 units of output at $16 per unit and 48 units at $15.80 per unit. The marginal revenue of the 48th unit of output is
A)$15.80.
B)$758.40
C)$6.40.
D)$0.20.

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the additional revenue that one more unit of product will bring. It can be calculated as the change in total revenue divided by the change in quantity sold. Here, selling the 48th unit increases total revenue from $752 (47 units * $16) to $758.40 (48 units * $15.80), a change of $6.40. Thus, the MR of the 48th unit is $6.40.

Suppose That a Pure Monopolist Can Sell 47 Units of Output