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.

Question

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue resulting from the sale of one additional unit of output. In this case, the sale of the 11th bicycle increases total revenue by $50 (from $7,000 to $7,050). Therefore, the marginal revenue of the 11th bicycle is $50.

Suppose a Monopoly Firm Produces Bicycles and Can Sell 10