A natural gas monopoly currently sells 100 cubic feet of gas at $1.10 per cubic foot.To sell one more cubic foot,the natural gas company must lower the price of gas to $1.09.Which of the following best describes the marginal revenue of the 101st cubic foot of natural gas?

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue received from selling one more unit of a good or service. In this case, selling the 101st cubic foot of natural gas would require the company to lower the price, which means the revenue received from selling that unit (or marginal revenue) would be less than the current price of $1.10. Therefore, the best choice is C, which states that the marginal revenue is less than $1.09.

A Natural Gas Monopoly Currently Sells 100 Cubic Feet of Gas