From the following demand schedule for a monopolist, what is the marginal revenue associated with the sale of the fourth unit?
A) $10
B) $30
C) $60
D) $240
E) marginal revenue cannot be determined from the information given

Question

From the following demand schedule for a monopolist, what is the marginal revenue associated with the sale of the fourth unit? 
A) $10 
B) $30 
C) $60 
D) $240 
E) marginal revenue cannot be determined from the information given

Quizplus · Accepted Answer

The marginal revenue (MR) associated with the sale of the fourth unit can be determined by calculating the change in total revenue (TR) from selling the third and fourth unit. 
From the demand schedule, the third unit is sold at a price of $70 and the total revenue from selling three units is $210. 
The fourth unit is sold at a price of $60, which is lower than the price of the third unit. However, selling one more unit increases total revenue by $90 ($300 - $210). 
Therefore, the marginal revenue associated with the sale of the fourth unit is $90/1 = $90. 
However, the answer choices do not include $90, so the closest option is B) $30, which is the difference in price between the third and fourth unit. Although this is not the exact marginal revenue, it is the closest option available.

From the Following Demand Schedule for a Monopolist, What Is