Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. Hi Phi Unlimitedʹs total revenue from installing 20 sound systems is $30,000 and its total revenue from installing 21 sound systems is $33,800. The price of the 21st sound system is ________ the marginal revenue of that system.
A) equal to
B) greater than
C) less than
D) indeterminate from the given information

Question

Quizplus · Accepted Answer

The marginal revenue for the 21st system is $3,800 ($33,800 - $30,000), while the price of the 21st system is $3,800. In a monopoly, the price is greater than the marginal revenue due to the downward-sloping demand curve.

Hi Phi Sound Unlimited Has a Monopoly Over the Installation