Table 9.1
$$\begin{array} { | c | c | c | }
\hline \text { Quantity } & \text { Price } & \text { Total Revenue } \
&\text { (dollars) } & \text { (dollars) } \
\hline 1 & 7.50 & 7.50 \
\hline 2 & 7.00 & 14.00 \
\hline 3 & 6.50 & 19.50 \
\hline 4 & 6.00 & 24.00 \
\hline 5 & 5.50 & 27.50 \
\hline 6 & 5.00 & 30.00 \
\hline
\end{array}$$
-Refer to Table 9.1.What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

Question

Table 9.1
 $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Price } & \text { Total Revenue } \
&\text { (dollars) } & \text { (dollars) } \
\hline 1 & 7.50 & 7.50 \
\hline 2 & 7.00 & 14.00 \
\hline 3 & 6.50 & 19.50 \
\hline 4 & 6.00 & 24.00 \
\hline 5 & 5.50 & 27.50 \
\hline 6 & 5.00 & 30.00 \
\hline
\end{array}$$
-Refer to Table 9.1.What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

Quizplus · Accepted Answer

The output effect is the price of the 5th unit ($5.50), and the price effect is the reduction in revenue from selling all previous units at the new lower price, which is -$2.00.

Table 91 -Refer to Table 9