Suppose a monopoly concrete contractor builds 20 driveways per month for $10,000 each.In order to increase sales to 21 driveways,the contractor must lower the price of driveways to $9,500.The marginal revenue of the 21st driveway is

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated by producing one additional unit of output. In this case, the contractor is reducing the price of the 21st driveway from $10,000 to $9,500, so the additional revenue generated from selling the extra unit is -$500, as the contractor is earning $500 less than they would have if they sold the driveway at the regular price. Therefore, the answer is (C) -$500.

Suppose a Monopoly Concrete Contractor Builds 20 Driveways Per Month