There is only one petrol station within hundreds of miles. The owner finds that when she charges $3 a litre, she sells 99 litres a day, and when she charges $2.95 a litre, she sells 100 litres a day. The marginal revenue of the 100th litre of petrol (in absolute terms) is:
A) $5.
B) $2.
C) $0.
D) $3.

Question

Quizplus · Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. The price drops by $0.05, and she sells one more litre, so the marginal revenue is $2.95 - $2.90 = $2.

There Is Only One Petrol Station Within Hundreds of Miles