Question

For one of its services, Johnson Logging Co. is currently producing 285 units for a total revenue of $5,700 as can be seen in the table below. They are considering increasing their quantity to 286. If the company has a monopoly for this service, what is the marginal revenue of the 286th unit?

Answer 1

The marginal revenue of the 286th unit is equal to the revenue generated by the 286th unit.

Step-by-step explanation:

The marginal revenue of the 286th unit can be calculated by considering the change in total revenue when the quantity increases from 285 to 286. In this case, the total revenue increases from $5,700 to $5,700 plus the additional revenue earned from the 286th unit.

Therefore, the marginal revenue of the 286th unit can be calculated as the difference between the total revenue at quantity 286 and the total revenue at quantity 285.

Marginal Revenue = Total revenue at quantity 286 - Total revenue at quantity 285

Marginal Revenue = $5,700 + Revenue from 286th unit - $5,700

Since the total revenue at quantity 285 is $5,700, the marginal revenue of the 286th unit can be calculated as:

Marginal Revenue = Revenue from 286th unit

Therefore, the marginal revenue of the 286th unit is equal to the revenue generated by the 286th unit.

Answer 2

Without the new total revenue for 286 units, we cannot calculate the exact marginal revenue for the 286th unit. The concept of marginal revenue is the additional revenue from selling one more unit, which is found by subtracting the total revenue before from the total revenue after selling that additional unit.

Step-by-step explanation:

When Johnson Logging Co. considers increasing its quantity to 286 units from 285, the marginal revenue of the 286th unit is the additional revenue generated by selling that one extra unit. To calculate the marginal revenue, we would normally need the total revenue after selling the 286th unit.

However, since that information is not included, we cannot provide a specific number. Instead, we can explain the concept. If we knew the new total revenue after selling the 286 units, we would subtract the original total revenue ($5,700) from the new total revenue and that result would represent the marginal revenue of the 286th unit.

For instance, if after selling 286 units, the total revenue were $5,720, then the marginal revenue for the 286th unit would be:

MR = Total Revenue after 286 units - Total Revenue after 285 units
MR = $5,720 - $5,700
MR = $20

This means that the marginal revenue for the 286th unit would be $20.