Question

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then marginal revenue of selling the eighth unit is equal to Group of answer choices $3. $4. $24. -$4.

Answer 1

The marginal revenue of selling the eighth unit is $-4.

A monopolist is the only producer in the industry. A monopolist operates in a monopoly. The monopolist sets the market price of their products.

Marginal revenue is the change in total revenue when quantity sold increases by one unit.

Marginal revenue = change in total revenue / change in quantity sold

change in total revenue = ($3 x 8) - ($4 x 7) = $-4

change in quantity sold = 8 - 7 = 1

Marginal revenue = $-4 / 1 = $4

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