Table 15-4
A monopolist faces the following demand curve:

-Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?
A) $12.50
B) $5
C) -$5
D) -$12.50

Question

Table 15-4
A monopolist faces the following demand curve:
 
-Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?
A) $12.50 
B) $5 
C) -$5 
D) -$12.50

Quizplus · Accepted Answer

To find the marginal revenue (MR) of the monopolist at 10 units of output, we look at the change in total revenue (TR) from producing the 10th unit compared to producing the 9th unit. From Table 15-4, we can see that the TR of selling 9 units of output is $90, while the TR of selling 10 units of output is $95. Therefore, the MR of producing the 10th unit is $5 ($95 - $90). Since the demand curve is downward sloping, the MR is less than the price of $10 per unit. Thus, the correct answer is C, -$5.

Table 15-4 A Monopolist Faces the Following Demand Curve