Assume that Pura Water,a local monopoly water utility company,is currently selling 10,000 gallons per hour at a price of $0.10 per gallon.If Pura Water wants to sell 1000 gallons more,it will have to lower the price to $0.09 per gallon.The marginal revenue of the 10,001 is approximately:

Question

Quizplus · Accepted Answer

The marginal revenue is calculated as the change in total revenue from selling one more unit. The total revenue at 10,000 gallons is $1,000 (10,000 x $0.10), and at 11,000 gallons is $990 (11,000 x $0.09). The change in revenue is $990 - $1,000 = -$10. Since the marginal revenue for the 10,001st gallon is approximately -$99.91, option A is correct.

Assume That Pura Water,a Local Monopoly Water Utility Company,is Currently