To increase sales from 7 units to 8 units,a single-price monopolist must drop the price from $7 per unit to $6 per unit.What is marginal revenue in this range?
A)$48
B)$6
C)$1
D)-$1
E)None of the above.

Question

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue as a result of selling one more unit of output. In this case, the monopolist sells 7 units at $7 per unit for a total revenue of $49. To increase sales to 8 units, the monopolist must lower the price to $6 per unit. The new total revenue will be 8 x $6 = $48.
Therefore, the marginal revenue of selling the 8th unit is:
MR = Total revenue with 8 units - Total revenue with 7 units
MR = $48 - $49
MR = -$1

To Increase Sales from 7 Units to 8 Units,a Single-Price