A monopolist charges $7 per unit for selling 6 units of his product.To sell 7 units, he reduces price to $6.5 per unit.The marginal revenue (net addition to revenue) from selling the seventh unit is then $3.5.

Question

Quizplus · Accepted Answer

This is true. Marginal revenue is the additional revenue earned from selling one additional unit. In this case, the monopolist reduced the price from $7 to $6.5 to sell the seventh unit, so the marginal revenue is $6.5 - $3.5 = $3.5.

A Monopolist Charges $7 Per Unit for Selling 6 Units