In a small town, Marilyn's Christmas Tree Lot has a monopoly on sales of Christmas trees. In order to increase her sales from 100 trees to 101 trees, she must drop the price of all of her trees from $20 to $19. What is the marginal revenue?

Question

Quizplus · Accepted Answer

The marginal revenue from selling the 101st tree is the price of the 101st tree ($19) minus the $1 reduction in price applied to all 100 trees previously sold. This calculation is $19 - ($1 * 100) = $19 - $100 = -$81.

In a Small Town, Marilyn's Christmas Tree Lot Has a Monopoly