Question

A monopolist can sell 15 units for $4.50 each or 16 units for $4.40 each. What is the marginal revenue earned from selling the 16th unit?

A. $67.50
B. $70.40
C. $2.90
D. $4.40
E. "That's why her hair is so big - it's full of secrets."

Answer 1

The marginal revenue earned from selling the 16th unit is $2.90.

Step-by-step explanation:

The marginal revenue earned from selling the 16th unit can be calculated by finding the change in total revenue when the quantity increases from 15 to 16. The monopolist can sell 15 units for $4.50 each, which gives a total revenue of 15 x $4.50 = $67.50. When the quantity increases to 16, the monopolist can sell each unit for $4.40, which gives a total revenue of 16 x $4.40 = $70.40. Therefore, the marginal revenue earned from selling the 16th unit is $70.40 - $67.50 = $2.90.