If a monopolist increases output from 14 to 15 units by lowering its price from $32 to $30 per unit,its marginal revenue would be
A) -$2.
B) $2.
C) $448.
D) $450.
E) $452.

Question

Quizplus · Accepted Answer

To find marginal revenue, we need to calculate the change in total revenue that results from producing one additional unit of output.

Before the price decrease, the monopolist was producing 14 units and selling them at $32 per unit, so its total revenue was: 
14 x $32 = $448

After the price decrease, the monopolist is producing 15 units and selling them at $30 per unit, so its total revenue is now: 
15 x $30 = $450

The change in total revenue is: 
$450 - $448 = $2

Therefore, the monopolist's marginal revenue from producing one additional unit is $2.

If a Monopolist Increases Output from 14 to 15 Units