If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is?

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

We can find the answer to this by using the equation for finding marginal revenue.  This equation is

marginal revenue = change in total revenue/change in quantity.

In this case, the original total revenue is found by multiplying the 14 units made by the $32 charged for each unit.  14*32 = $448.  The new total revenue is found by multiplying the 15 units made by the $31 charged for each unit.  15*31 = $465 To find the marginal revenue, we calculate $465 - $448 and get $17.  Since the change in quantity is 1, marginal revenue is $17.

The marginal revenue received by the monopolist for the 15th unit is $17. 

Sources:

We’ve answered 318,936 questions. We can answer yours, too.

Ask a question