Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. If Hi Phi Unlimited's total revenue from installing 15 sound systems is $30,000 and its total revenue from installing 18 sound systems is $33,000, what is the marginal revenue of the eighteenth sound system?
A) -$3,000
B) $1,000
C) $1,500
D) $3,000

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated from selling one more unit of a good or service. In this case, the increase in total revenue from selling 3 more sound systems (from 15 to 18) is $33,000 - $30,000 = $3,000. Therefore, the marginal revenue of each of those 3 systems, assuming they each sold for the same price, is $3,000 / 3 = $1,000.

Hi Phi Sound Unlimited Has a Monopoly Over the Installation