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-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The marginal revenue of the fourth unit of production is:
A)$200.
B)$250.
C)$450.
D)$500.

Question

Use the following to answer question: 
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The marginal revenue of the fourth unit of production is:
A)$200. 
B)$250. 
C)$450. 
D)$500.

Quizplus · Accepted Answer

To find marginal revenue, we need to find the change in total revenue that results from producing one additional unit of output. In this case, the total revenue is given by the demand multiplied by the quantity produced, so we can first find the total revenue for each level of output:
- For the first unit, TR = $300 (since P = $300 and Q = 1)
- For the second unit, TR = $560 (P = $280 and Q = 2)
- For the third unit, TR = $780 (P = $260 and Q = 3)
- For the fourth unit, TR = $960 (P = $240 and Q = 4)

The marginal revenue of the fourth unit is then the difference in total revenue between producing the third and fourth units, which is:
MR = $960 - $780 = $180

Therefore, the correct answer is B) $250, which is not one of the choices provided. However, the closest choice is B) $250, which is $70 higher than the actual value of the marginal revenue.

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