A firm can sell 1 unit at $9 or 2 units at $8 or 3 units at $7, and so on. What is the marginal revenue from the sale of the fifth unit?
A) $0
B) $1
C) $4
D) $5

Question

Quizplus · Accepted Answer

To find marginal revenue, we need to find the additional revenue from selling one more unit. 
Selling the first unit gives revenue of $9. 
Selling two units gives total revenue of $16 ($8 for each of the two units). 
Selling three units gives total revenue of $21 ($7 for each of the three units). 
Selling four units gives total revenue of $24 ($6 for each of the four units). 
Selling five units gives total revenue of $25 ($5 for each of the five units). 
The additional revenue from selling the fifth unit is therefore $1. 
The best choice would be to sell the fifth unit since it adds an additional revenue of $1.

A Firm Can Sell 1 Unit at $9 or 2