If the demand for the Weekly World News at a local grocery store is described by Q = 2,500 - 400P - I/10for I = $15,000 and P = $1.50, the marginal revenue of an additional paper sold at this store is
A)$1.50.
B)$.38.
C)$.50.
D)$.15.
E)$1.

Question

Quizplus · Accepted Answer

The demand function for the Weekly World News at the local grocery store is given by:

Q = 2,500 - 400P + 150I

where Q is the quantity demanded, P is the price, and I is the level of consumer income.

To find the marginal revenue, we need to take the derivative of the demand function with respect to P:

dQ/dP = -400

This means that for each additional paper sold, the store will receive $1.50 in revenue (since the price is $1.50). Therefore, the marginal revenue is $1.50 or 0.50 per paper.

So the best choice is C.

If the Demand for the Weekly World News at a Local