If a theatre company expects $250,000 in ticket revenue from five performances and $288,000 in ticket revenue if it adds a sixth performance, the
A) marginal revenue of the sixth performance is $48,000.
B) marginal revenue of the sixth performance is $38,000.
C) cost of staging the sixth performance is probably higher than the cost of staging the previous five.
D) company will be making a loss on the sixth performance because its ticket sales will be less than the average received from the previous five.

Question

Quizplus · Accepted Answer

The marginal revenue of the sixth performance can be calculated by subtracting the ticket revenue of the previous five performances from the ticket revenue of all six performances.

Marginal Revenue = Total revenue from all six performances - Revenue from first five performances

Marginal Revenue = $288,000 - $250,000 
Marginal Revenue = $38,000

Therefore, the correct answer is B. The cost of staging the sixth performance is not given in the question, so we cannot determine whether it is higher or lower than the cost of staging the previous five performances. Additionally, the question does not provide information on the number of tickets sold or the profit from each performance, so we cannot determine whether the company will be making a loss on the sixth performance.

If a Theatre Company Expects $250,000 in Ticket Revenue from Five