Question

A linear revenue function is R = 56x. (Assume R is measured in dollars.)

(a) What is the slope m? m = 56 Correct: Your answer is correct.
(b) What is the marginal revenue MR ? MR = 56 Correct: Your answer is correct.

What does the marginal revenue mean?

a. Each additional unit sold decreases the revenue by this many dollars.
b. If the number of units sold is increased by this amount, the revenue decreases by $1.
c. If the number of units sold is increased by this amount, the revenue increases by $1.
d. Each additional unit sold yields this many dollars in revenue.

(c) What is the revenue received from selling one more item if 50 are currently being sold? $ Incorrect: Your answer is incorrect. What is the revenue received from selling one more item if 100 are being sold? $ Incorrect: Your answer is incorrect.

Answer 1

d

Explanation:

Marginal revenue (MR) is defined as the additional revenue that will be generated by increasing sales by one unit of sold product.

Marginal revenue can be calculated using the formula below:

MR = change in revenue/change in quantity of sold product

e.g. If our revenue changes from $168 after selling 3 products to $224 after selling 4 products the marginal revenue would $224 - $168/4 units - 3 units = $56 per additional unit sold