Figure 9.3
-Refer to Figure 9.3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,________.

Question

Figure 9.3 
-Refer to Figure 9.3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,________.

Quizplus · Accepted Answer

In the diagram, X represents the decrease in price necessary to sell one additional unit (loss in revenue from the price effect) and Y represents the increase in revenue from selling one additional unit (gain in revenue from the output effect). Therefore, the correct answer is C, where Y represents the gain (output effect) and X the loss (price effect).

Figure 9.3 -Refer to Figure 9.3.The Marginal Revenue from One Additional Unit