Question

Suppose that the only café in town can sell five fish dinners per night at a price of $10 each. If this monopoly firm wants to sell six fish dinners, it must reduce the price to $9 each. When the business pursues this strategy to increase sales, the marginal revenue from the sixth dinner sold is:

a. $4.
b. $54.
c. $9.
d. $50.

Answer 1

a.$4

Step-by-step explanation:

initial price of fish dinner per piece was= $10

no. of fish dinner sold = 5

total initial revenue= 5*10= $50

new price of fish dinner = $9

and now six fish dinners are sold

new revenue= 6*9= $54

therefore the marginal revenue from the sixth dinner sold= 54-50= $4

hence option a is correct