Exhibit 23-7
Refer to Exhibit 23-7. Let D be the demand curve facing a perfectly price-discriminating monopolist. The marginal revenue it receives from selling the 150th unit of good X sold equals
A)$60.
B)$45.
C)$30.
D)$0, since it sells less than 150 units.

Question

Exhibit 23-7 
Refer to Exhibit 23-7. Let D be the demand curve facing a perfectly price-discriminating monopolist. The marginal revenue it receives from selling the 150th unit of good X sold equals
A)$60. 
B)$45. 
C)$30. 
D)$0, since it sells less than 150 units.

Quizplus · Accepted Answer

For a perfectly price-discriminating monopolist, marginal revenue equals the price of each additional unit sold. At 150 units sold, the price of good X is $60. The marginal revenue it receives from selling the 150th unit is the same as the price of $60, but the question is asking for the marginal revenue received from selling the 151st unit. Since the monopolist is perfectly price-discriminating, it can only sell exactly 150 units at a price of $60 each. Therefore, it does not sell a 151st unit and the marginal revenue received from selling the 150th unit is irrelevant to the question.

The marginal revenue received from selling any unit after the 150th unit is $45, as can be seen from the graph by looking at the vertical distance between the demand curve and the marginal revenue curve. Therefore, the answer is B.

Exhibit 23-7 Refer to Exhibit 23-7. Let D Be the Demand Curve