Suppose a monopoly firm produces a medical device and can sell 15 items per month at a price of $2,000 each.In order to increase sales by one item per month,the monopolist must lower the price of its medical device by $100 to $1,900.The marginal revenue of the 16^th item is:

Question

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To increase sales by one item per month, the monopolist had to lower the price by $100. This means that the monopolist's marginal revenue for the 16th item is $100 less than the revenue for the 15th item.

The revenue for the 15th item is: 
15 items x $2,000 per item = $30,000

The revenue for the 16th item is: 
16 items x $1,900 per item = $30,400

The marginal revenue for the 16th item is: 
$30,400 - $30,000 = $400.

Therefore, the answer is B, $400.

Suppose a Monopoly Firm Produces a Medical Device and Can