Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit.The monopolist will produce and sell the sixth unit if its marginal cost is
A)$4 or less.
B)$3.90 or less.
C)$3.50 or less.
D)$3.40 or less.

Question

Quizplus · Accepted Answer

The monopolist will produce the sixth unit if the marginal cost is less than or equal to the marginal revenue from selling that unit. The marginal revenue from selling the sixth unit is $3.40, calculated as the change in total revenue when the quantity increases from 5 to 6 units.

Suppose That a Pure Monopolist Can Sell 5 Units of Output