To increase sales from 7 units to 8 units,a single-price monopolist cuts the price from $7 per unit to $6 per unit.What is marginal revenue from selling the 8th unit?
A)$48
B)$6
C)$1
D)-$1
E)$7

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the additional revenue that will be generated by increasing product sales by one unit. In this case, to sell the 8th unit, the price is reduced from $7 to $6 for all units, not just the 8th unit. Therefore, the revenue from selling 7 units at $7 each is $49 (7 units * $7/unit), and the revenue from selling 8 units at $6 each is $48 (8 units * $6/unit). The marginal revenue from selling the 8th unit is the change in total revenue, which is $48 - $49 = -$1.

To Increase Sales from 7 Units to 8 Units,a Single-Price