In a small town, Marilyn's Christmas Tree Lot has a monopoly on sales of Christmas trees. In order to increase her sales from 100 trees to 101 trees, she must drop the price of all of her trees from $20 to $19. What is the marginal revenue?

Question

Quizplus · Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. Initially, total revenue is 100 trees * $20 = $2000. After the price drop, total revenue is 101 trees * $19 = $1919. The marginal revenue is $1919 - $2000 = -$81.

In a Small Town, Marilyn's Christmas Tree Lot Has a Monopoly