Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. For the monopolist to profitably produce and sell the sixth unit of output, its marginal cost must be anywhere at or below
A)$4.
B)$3.90.
C)$3.50.
D)$3.40.

Question

Quizplus · Accepted Answer

The marginal revenue for the sixth unit is $3.40, calculated as the change in total revenue from selling the sixth unit. The monopolist will produce the sixth unit if the marginal cost is at or below this marginal revenue.

Suppose That a Pure Monopolist Can Sell 5 Units of Output