Table 14-3
Consider the following demand and cost information for a monopoly.

-Refer to Table 14-3.The marginal revenue of the 2nd unit is
A) $10.
B) $15.
C) $20.
D) $25.

Question

Table 14-3
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 14-3.The marginal revenue of the 2nd unit is
A) $10. 
B) $15. 
C) $20. 
D) $25.

Quizplus · Accepted Answer

Marginal revenue is calculated as the change in total revenue divided by the change in quantity. In this case, the change in total revenue from selling one more unit is $25 (from $125 to $150) and the change in quantity is 2 units (from 1 to 2). Therefore, the marginal revenue of the 2nd unit is $12.50 per unit or $15 rounded to the nearest dollar.

Table 14-3 Consider the Following Demand and Cost Information for a Monopoly