Suppose that Louise is the only person licensed to rent out paddle boats on the lake near her home during the summer. When she increases her rentals from 10 paddleboats to 11 paddleboats, the market rental price declines from $30 per rental to $29 per rental. The marginal revenue of the 11th rental is:
A)$1.
B)$9.
C)$19.
D)$29.

Question

Quizplus · Accepted Answer

The marginal revenue of the 11th rental is calculated by the total revenue change from renting out the 11th boat. Initially, 10 boats rented at $30 each generate $300. With the 11th boat, the price drops to $29, making the total revenue $319 (11 boats * $29 each). The marginal revenue is the change in total revenue, which is $319 - $300 = $19.

Suppose That Louise Is the Only Person Licensed to Rent