Question

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301st unit of output is:

Answer 1

Answer:

Marginal revenue -$75.40

Explanation:

Marginal revenue is change in revenue due to 1 unit change therefore we need to calculate total change in revenue

we know that

total revenue $= \frac{Price}{times\ Quantity}$

for 300 unit total revenue  is  $= \frac{45}{300} = 13500$

And for 301 unit total revenue  is $= \frac{44.60}{301} = 13424.6$

Now

Marginal revenue = net total revenue = (13424.6 - 13500) = -$75.40