At a price of $25.00, 8 units of a good are sold, and at a price of $24.00, 9 units are sold. The marginal revenue from the ninth unit is:
A) -$1.00.
B) $1.00.
C) $16.00.
D) $24.00.

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the additional revenue that is gained from selling one more unit of a good or service. It can be calculated as the change in total revenue divided by the change in quantity sold. In this case, when the price drops from $25.00 to $24.00, one more unit is sold (from 8 units to 9 units), so the change in quantity is 1 unit. The total revenue at $25.00 is 8 units * $25.00 = $200.00, and the total revenue at $24.00 is 9 units * $24.00 = $216.00. The change in total revenue is $216.00 - $200.00 = $16.00. Therefore, the marginal revenue from selling the ninth unit is $16.00.

At a Price of $25