A firm is currently selling its output for $30 per unit.If the firm reduces the price to $29 in order to boost sales,marginal revenue will
A)equal $30
B)equal $29
C)be between $30 and $29
D)be less than $29
E)exceed $30

Question

Quizplus · Accepted Answer

When the firm reduces the price to $29, it will have to lower the price for all units sold, not just the additional ones. As a result, the marginal revenue for each additional unit sold will be less than $29, since the firm is earning less revenue per unit. Therefore, the marginal revenue will be less than $29.

A Firm Is Currently Selling Its Output for $30 Per