The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3
-In Table 7.3,at an output rate of 5 submarines per year,marginal revenue is equal to:
A) -$30 million.
B) $10 million.
C) $90 million.
D) $250 million.

Question

The following table shows some costs and prices faced by a company that produces submarines.
Table 7.3 
-In Table 7.3,at an output rate of 5 submarines per year,marginal revenue is equal to:
A) -$30 million. 
B) $10 million. 
C) $90 million. 
D) $250 million.

Quizplus · Accepted Answer

Marginal revenue is equal to the change in total revenue from producing one additional unit. At an output rate of 5 submarines per year, the total revenue is $500 million, while at an output rate of 6 submarines per year, the total revenue is $510 million. Therefore, the marginal revenue of producing the sixth submarine is $10 million (510 million - 500 million).

The Following Table Shows Some Costs and Prices Faced by a Company