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Vadim26 [7]
3 years ago
13

Cogswell Corporation is considering how to price their patented mega-cogs. It knows that if it prices each widget at $50 then th

ey won't sell any widgets. A price of $45 brings a sale of only 1 unit. A price of $40 brings the a sale of 2 units. Finally, a price of $35 brings a sale of 3 units. The Marginal Revenue (MR) of the third unit is:
Business
1 answer:
allsm [11]3 years ago
5 0

Answer: $25

Explanation:

Total revenue, at price = $50

Total revenue = price × units sold

                       = $50 × 0

                       = 0

Total revenue, at price = $45

Total revenue = price × units sold

                       = $45 × 1

                       = $45

Total revenue, at price = $40

Total revenue = price × units sold

                       = $40 × 2

                       = $80

Total revenue, at price = $35

Total revenue = price × units sold

                       = $35 × 3

                       = $105

Marginal revenue of third unit = \frac{Change\ in\ total\ revenue}{change\ in\ units\ sold}

                                                    = \frac{105 - 80}{3 - 2}

                                                    = $25

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