Suppose that a monopolist was selling 20 units at $50 each but has now reduced the price to $48 and is now selling 21 units.What is the monopolist's marginal revenue?
A)$8.
B)$48.
C)$50.
D)$1,000.

Question

Quizplus · Accepted Answer

Marginal revenue is the additional revenue that a firm gains when it sells one additional unit of a product. Here, the monopolist sells one additional unit (from 20 to 21 units) by reducing the price from $50 to $48. The total revenue before the price change was 20 units * $50 = $1,000. After the price change, the total revenue is 21 units * $48 = $1,008. The marginal revenue is the change in total revenue from selling one more unit, which is $1,008 - $1,000 = $8.

Suppose That a Monopolist Was Selling 20 Units at $50