Suppose that when price is $75, a monopoly can sell 6 units, and when price is $87.50, the monopolist can sell 5 units. Then which of the following is marginal revenue?
A) $450.
B) $437.50.
C) $12.50.
D) $0.

Question

Suppose that when price is $75, a monopoly can sell 6 units, and when price is $87.50, the monopolist can sell 5 units. Then which of the following is marginal revenue?​
A) ​$450.
B) ​$437.50.
C) ​$12.50.
D) ​$0.

Quizplus · Accepted Answer

Marginal revenue is the change in total revenue resulting from a one-unit increase in sales. 
When the monopolist sells 6 units at $75, their total revenue is 6*$75=$450.
When the monopolist sells 5 units at $87.50, their total revenue is 5*$87.50=$437.50.
Therefore, the change in revenue from selling one less unit is $450-$437.50=$12.50, which is the marginal revenue.

Suppose That When Price Is $75, a Monopoly Can Sell