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 fifth 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 fifth unit of output is:

Quizplus · Accepted Answer

For a monopolist, MR < P.

To find MR at a given level of output, we can look at the change in total revenue when output is increased by one unit.

The table shows that the total revenue for selling 5 units is $30 (5 x $6).

If the monopolist wants to sell the 6th unit, they need to lower the price from $6 to $5, which means that the total revenue will increase from $30 to $31 (5 x $6 + 1 x $5).

Therefore, the MR of the 5th unit is the difference between these two total revenue levels, which is $1.

So, the MR of the 5th unit is $1, which is equivalent to a price decrease of $1.

We can use the same logic to find the MR at other levels of output.

For example, to find the MR of the 4th unit, we look at the total revenue for selling 4 units ($28) and the total revenue for selling 5 units ($30), and we calculate the difference between these two levels of total revenue, which is $2.

Therefore, the correct choice is C) $2.

Suppose the Table Below Describes the Relationship Between Price and Quantity