Suppose a monopolist was charging a price of $120 for its product and was selling 80 units.If it lowers its price to $119 and,as a result,sells 81 units what is the marginal revenue for the product?

Question

Quizplus · Accepted Answer

To calculate marginal revenue, we need to find the change in total revenue when the quantity sold increases by 1 unit. Here, the change is from selling 80 units at $120 each to selling 81 units at $119 each.

Initial Total Revenue = 80 x $120 = $9,600 
New Total Revenue = 81 x $119 = $9,639

Change in Total Revenue = $9,639 - $9,600 = $39

Therefore, the marginal revenue for selling the 81st unit is $39.

Suppose a Monopolist Was Charging a Price of $120 for Its