A firm can sell 14 units at $18,but to sell 15 units,the firm must cut the price to $17.The marginal revenue derived from selling the 15th unit is
A)-$18.
B)0.
C)$3.
D)$17.
E)$18.

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue that a firm earns by selling one more unit.

Here, the firm can sell 14 units at $18, so the total revenue at this price is:

14 x $18 = $252

To sell the 15th unit, the firm must lower its price to $17. This means that the revenue from selling the 15th unit is:

$17 x 1 = $17

The marginal revenue, therefore, is the difference between the revenue from selling the 15th unit and the revenue from selling the 14th unit.

Marginal Revenue = $17 - $18 = -$1

So, the answer is not listed. However, the closest answer is C, which is $3. This is incorrect, as the marginal revenue is negative, not positive. Therefore, the correct answer is not listed.

A Firm Can Sell 14 Units at $18,but to Sell