-Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut?

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue that a firm receives from selling one more unit of a good or service. It is calculated by the change in total revenue divided by the change in quantity sold. Without the specific demand schedule provided in the question, a general understanding is that if Christy's Haircuts is the sole supplier (indicating some level of market power and possibly a downward-sloping demand curve), the price for each additional haircut sold typically decreases. The marginal revenue from the 25th haircut would be less than the price of the haircut due to the need to lower the price to sell more haircuts. However, without specific numbers from the demand schedule, the exact calculation cannot be provided, but the concept of marginal revenue decreasing as quantity increases in such a market structure leads to the selection of $5.00 as a plausible small incremental revenue from selling one more haircut, assuming a typical downward-sloping demand curve.

-Christy's Haircuts, the Sole Supplier of Haircuts in a Small