Wendell can sell five motor homes per week at a price of $22 000.If he lowers the price of motor homes to $20 000 per week he will sell six motor homes.The marginal revenue of the sixth motor home is

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue that is generated by increasing product sales by one unit. In this case, selling the sixth motor home at $20,000 instead of $22,000 decreases the total revenue by $2,000 for the first five motor homes ($10,000 in total), but it adds an additional sale of $20,000, making the marginal revenue of the sixth motor home $10,000 ($20,000 - $10,000).

Wendell Can Sell Five Motor Homes Per Week at a Price