Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. If Hi Phi Unlimitedʹs total revenue from installing 20 sound systems is $30,000 and its total revenue from installing 21 sound systems is $30,800, what is the marginal revenue of the twenty-first sound system?
A) -$1,500
B) -$700
C) $800
D) $1,467

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated from selling one more unit of a good or service. It is calculated by subtracting the total revenue before the sale of the extra unit from the total revenue after the sale of the extra unit. In this case, the total revenue increased from $30,000 to $30,800 with the sale of the twenty-first sound system, so the marginal revenue is $30,800 - $30,000 = $800.

Hi Phi Sound Unlimited Has a Monopoly Over the Installation