Table 7.1
-Refer to Table 7.1, which shows the relationship between the price that Gladys charges for a product and the quantity of that product that Gladys sells. The marginal revenue that Gladys receives from selling the fifth unit of output is
A) $5, because that is the price per unit of output that Gladys receives.
B) $5, because that is the quantity that Gladys sells.
C) $25, because Gladys sells five unit of output at a price of $5.
D) $1, because Gladys earns $1 more in revenue by increasing her output to five units from four units.

Question

Table 7.1
-Refer to Table 7.1, which shows the relationship between the price that Gladys charges for a product and the quantity of that product that Gladys sells. The marginal revenue that Gladys receives from selling the fifth unit of output is
A) $5, because that is the price per unit of output that Gladys receives. 
B) $5, because that is the quantity that Gladys sells. 
C) $25, because Gladys sells five unit of output at a price of $5. 
D) $1, because Gladys earns $1 more in revenue by increasing her output to five units from four units.

Quizplus · Accepted Answer

Marginal revenue is the change in revenue from selling one additional unit of output. In this case, Gladys sells the fifth unit for $5 but she also sold the first four units at a price of $6 each. So, the marginal revenue from selling the fifth unit is only $1 ($5 - $4). Therefore, the correct answer is D.

Table 7.1 -Refer to Table 7.1, Which Shows the Relationship Between the Between