A monopolist can sell 300 units of output for $29.00 per unit. Alternatively, it can sell 301 units of output for $28.25 per unit. The marginal revenue of the 301st unit of output is:
A) -$196.75.
B) -$0.75.
C) $196.75.
D) $28.25.

Question

Quizplus · Accepted Answer

The marginal revenue is the change in total revenue from selling one more unit. Selling 300 units at $29 each gives $8,700. Selling 301 units at $28.25 each gives $8,502.75. The marginal revenue is $8,502.75 - $8,700 = -$197.25.

A Monopolist Can Sell 300 Units of Output for $29