Table 15-4
A monopolist faces the following demand curve:
-Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?

Question

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. If the monopolist produces 10 units, what is its marginal revenue?

Quizplus · Accepted Answer

Marginal revenue (MR) is the change in total revenue resulting from the sale of one additional unit of output. To determine MR, we need to first determine the monopolist's total revenue at the current output level. In this case, if the monopolist produces 10 units, its total revenue would be $125 (10 units x $12.50 per unit). 
To find MR, we then need to find the change in total revenue that results from producing and selling one more unit. If the monopolist produces and sells 11 units, its total revenue would be $137.50 (11 units x $12.50 per unit). The change in total revenue from producing one more unit is therefore $12.50 ($137.50 - $125). This means that the marginal revenue for the 11th unit is $12.50.

Table 15-4 A Monopolist Faces the Following Demand Curve