A monopolist can sell 7 units per day at $7 per unit,or 8 units per day at $6 per unit.Its marginal revenue for the eighth unit of output is:
A) $48.
B) $6.
C) $1.
D) $-1

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the change in total revenue due to a unit change in output. 
In this case, the monopolist can sell either 7 units at $7 or 8 units at $6. 
Total revenue for selling 7 units is 7 x $7 = $49. 
Total revenue for selling 8 units is 8 x $6 = $48. 
Therefore, the marginal revenue for the 8th unit is $48 - $49 = -$1. 
Since the marginal revenue is negative, it means that the total revenue decreases by $1 when the monopolist increases output by 1 unit. The best choice is D, which indicates that the marginal revenue for the 8th unit of output is $-1.

A Monopolist Can Sell 7 Units Per Day at $7