The table below shows the quantity produced and the price set by a monopoly firm. Based on the table, the marginal revenue of the 28^th unit of output is _____.Table 8-2 A)−$16.50 B)−$13.50 C)$13.50 D)$16.50 E)$14.50

Question

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Marginal Revenue is the change in total revenue when one unit of output is sold. The table shows that when the quantity increases from 7 to 8 units, the total revenue increases from $63 to $75, indicating that the marginal revenue of the 8th unit is $12. Similarly, the marginal revenues for the subsequent units are -$3, -$9, and -$15. Therefore, the marginal revenue for the 28th unit would be the 8th unit's marginal revenue ($12) minus the sum of marginal revenues from the 9th to the 27th unit, which is 19 units in total, multiplied by $3 (the constant negative change in marginal revenue). Hence, marginal revenue for the 28th unit is $12 - (19 ×$3) = $12 - $57 = -$45. As the firm is a monopoly, it has to reduce the price to sell more units of output, and this reduces the marginal revenue of each additional unit. Thus, the answer is B: -$13.50, as the marginal revenue for the 28th unit is the same as that of the 27th unit.

The Table Below Shows the Quantity Produced and the Price