Scenario 1-1

Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."

-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 500 cigars?
A)gross earnings
B)marginal revenue
C)sales revenue
D)gross profit

Question

Scenario 1-1

Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."

-Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 500 cigars?
A)gross earnings
B)marginal revenue
C)sales revenue
D)gross profit

Quizplus · Accepted Answer

The economic term for the incremental revenue received from the sale of the last 400 t-shirts is marginal revenue. This is because marginal revenue refers to the additional revenue generated by producing and selling one more unit. In this case, the last 400 t-shirts resulted in an increase in revenue of $4,000.

Scenario 1-1 Suppose a T-Shirt Manufacturer Currently Sells 5,000 T-Shirts Per Week