Suppose the table below describes the relationship between price and quantity demanded for a monopolist. $$\begin{array} { | c | c | }
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ The marginal revenue of the third unit of output is:

Question

Suppose the table below describes the relationship between price and quantity demanded for a monopolist. $$\begin{array} { | c | c | } 
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ The marginal revenue of the third unit of output is:

Quizplus · Accepted Answer

For a monopolist, the marginal revenue (MR) is always less than the price (P) because the monopolist must lower the price on all units sold in order to sell one additional unit. To find the marginal revenue of the third unit, we need to calculate the change in total revenue (TR) from selling the second and third units, and then divide that by the change in quantity (which is 1 in this case):

MR = (TR3 - TR2)/(3-2)

TR2 = 2 x $9 = $18 
TR3 = 3 x $8 = $24

So,

MR = ($24 - $18)/1 = $6

Therefore, the correct answer is C) $6.

Suppose the Table Below Describes the Relationship Between Price and Quantity