Kate's Great Crete (KGC)is a local monopolist of ready-mix concrete.Its annual demand function is Q = 20,000 - 400P,where P is the price,in dollars,of a cubic yard of concrete and Q is the number of cubic yards sold per year.What is KGC's marginal revenue when it sells 5,000 cubic years of concrete per year?

Question

Quizplus · Accepted Answer

To find KGC's marginal revenue, we need to take the derivative of the demand function with respect to Q and then multiply it by Q.

The derivative of the demand function is: 
dQ/dP = -400

Multiplying by Q, we get: 
MR = (-400) * Q

When Q = 5,000, we have: 
MR = (-400) * 5,000 = -$2,000

Note that we have a negative marginal revenue, which is typical for a monopolist. This means that in order to sell more units, KGC will have to lower its price.

To get the absolute value of the marginal revenue, we take the negative sign off: 
|-2000| = $2,000

Finally, to get the marginal revenue per unit, we divide by the number of units sold: 
$2,000/5,000 = $25.00

Therefore, the answer is B) $25.00.

Kate's Great Crete (KGC)is a Local Monopolist of Ready-Mix Concrete