A firm sells 99 units of output when price equals $10, and 100 units of output when price equals $9. Its marginal revenue for the 100th unit of output is negative.

Question

Quizplus · Accepted Answer

The marginal revenue for the 100th unit is calculated as the change in total revenue divided by the change in quantity sold. When the price drops from $10 to $9 to sell one additional unit, total revenue changes from $990 (99 units * $10) to $900 (100 units * $9), resulting in a negative marginal revenue of -$90 for the 100th unit.

A Firm Sells 99 Units of Output When Price Equals