Question

Based on this chart, what is the marginal revenue, in dollars, at quantity three jackets?Select one:

a. Four
b. 11
c. 16
d. 36

Answer 1

16 Was Correct. Got A 100%!

Explanation:

Answer 2

Marginal Revenue is the rate of change of Total Revenue.

So when we want to know the marginal revenue at a certain quantity, we check by how much the total revenue changed from the previous quantity unit.

For example, looking at the table,

• At quantity 1, the total revenue is 20.
• At quantity 2, the total revenue is 38.
• At quantity 3, the total revenue is 54.

So the marginal revenue at quantity 2 is the difference between total revenue of quantity 2 with the previous quantity (which is quantity 1). So,

`38-20=18`

Similarly, the marginal revenue at quantity 3 is the difference between total revenue of quantity 3 with the previous quantity (which is quantity 2). So,

`54-38=16`

Our answer is 16, option C.

ANSWER: C