The Fish Shack is the only seafood restaurant in a remote village. It charges $15 for a bowl of fish soup and sells ten bowls of it a day. In order to increase sales to eleven bowls a day, it must reduce the price to $14. What is the marginal revenue of the eleventh bowl?

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue from selling one more unit. Initially, the revenue is $150 (10 bowls at $15 each). After reducing the price to $14, the revenue is $154 (11 bowls at $14 each). The marginal revenue of the eleventh bowl is the difference, $154 - $150 = $4.

The Fish Shack Is the Only Seafood Restaurant in a Remote