Question

A monopolist can sell 15 toys per day for $12.50 each. To sell 16 toys per day, the price must be cut to $12.20. The marginal revenue of the 16th toy is:_________.A. $12.20.B. $-0.30.C. $7.70 .D. $16.

Answer 1

Answer:

A monopolist can sell 15 toys per day for $12.50 each. To sell 16 toys per day, the price must be cut to $12.20. The marginal revenue of the 16th toy is:_________.

A. $12.20.

Explanation:

For this monopolist, the marginal revenue is the incremental revenue which it generates from each additional unit of sales.  It can also be expressed as the rate at which total revenue changes from what it was before now.  In this case, the additional revenue that the monopolist will get from selling one additional unit is $12.20.  It is the additional revenue that the monopolist gets for the 16th item.