If a firm sells 10 units of output at $100 per unit and 11 units of output when price is reduced to $99, its marginal revenue for the last unit sold is
A) $1.
B) $10.
C) $109.
D) $89.

Question

Quizplus · Accepted Answer

The marginal revenue for the last unit sold is calculated by the total revenue change divided by the change in quantity sold. Initially, revenue is 10 units * $100 = $1000. After the price drop, revenue is 11 units * $99 = $1089. The change in revenue is $1089 - $1000 = $89, and the change in quantity sold is 1 unit, making the marginal revenue for the last unit $89.

If a Firm Sells 10 Units of Output at $100