Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle.In order to increase sales by one bicycle per month,the monopolist must lower the price of its bicycles by $50 to $650 per bicycle.The marginal revenue of the 11th bicycle is
A)$150.
B)-$50.
C)$50.
D)$7,150.

Question

Quizplus · Accepted Answer

The marginal revenue of the 11th bicycle is calculated by the total revenue difference between selling 11 bicycles and 10 bicycles. Initially, the firm sells 10 bicycles at $700 each, totaling $7000. To sell the 11th bicycle, the price is reduced to $650 for all bicycles, making the total revenue $7150 (11 bicycles * $650 each). The difference in total revenue, $7150 - $7000, equals $150, which is the marginal revenue of the 11th bicycle.

Suppose a Monopoly Firm Produces Bicycles and Can Sell 10