The price reduction effect of the sale of a firm's last ΔQ units of output is:
A) the additional revenue from selling ΔQ units at price P(Q).
B) the reduced revenue from selling (Q - ΔQ) units at a lower price of P(Q).
C) the additional revenue from selling ΔQ units at price P(Q + ΔQ).
D) the reduced revenue from selling (Q - ΔQ) units at a lower price of P(Q - ΔQ).

Question

Quizplus · Accepted Answer

The price reduction effect of the sale of a firm's last ΔQ units of output refers to the decrease in price required to sell the additional units. This means that the firm is selling the last ΔQ units at a lower price than the original price P(Q), reducing the revenue earned on these units. Thus, the correct choice is B - the reduced revenue from selling (Q - ΔQ) units at a lower price of P(Q).

The Price Reduction Effect of the Sale of a Firm's