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 = $1.50, the marginal revenue of an additional paper sold at this store is
A)$.15.
B)$.38.
C)$.50.
D)$1.50.
E)$1.

Question

Quizplus · Accepted Answer

The demand function given is:

Q = 2500 - 400P + (I/10)

where Q is the quantity demanded of Weekly World News, P is the price per paper, and I is the income level of the consumers.

To find the marginal revenue of an additional paper sold at the store, we need to find the derivative of the demand function with respect to quantity, and then multiply it by the price.

Q = 2500 - 400P + (I/10)

dQ/dP = -400

MR = dQ/dP * P = -400 * P

At P = $1.50, MR = -400 * $1.50 = -$600

The negative sign indicates that the marginal revenue is decreasing as we sell more papers.

Therefore, the best choice is to sell fewer papers at a higher price, in order to maximize profit.

If the Demand for the Weekly World News at a Local