The above table shows the quantity demanded at varying prices and the corresponding marginal cost of production for a mon firm.
-Refer to the table above. What is the marginal revenue of producing the 40th unit of output?

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the additional revenue gained from selling an additional unit of output. It is equal to the price of the unit for perfectly competitive firms.

To find the marginal revenue of producing the 40th unit, we need to look at the change in total revenue when going from producing 39 units to producing 40 units.

When producing 39 units, the price is $350, so the total revenue is 39 x 350 = $13,650. 
When producing 40 units, the price is $340, so the total revenue is 40 x 340 = $13,600.

The change in total revenue is -$50, meaning that producing the 40th unit leads to a decrease in total revenue. Therefore, the marginal revenue of producing the 40th unit is -$50.

Since none of the answer choices are negative, we look for the option closest to our answer, which is $260, or choice (C).

The Above Table Shows the Quantity Demanded at Varying Prices