Question

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is A. $3.90 or less B. $3.40 or less C. $3.50 or less D. $4.00 or less Answer: B

Answer 1

$3.40 0r less

Step-by-step explanation:

In order to get marginal cost of the sixth unit

step 1 determine the total cost of producing 6 units = 6 * $3.90 = $23.4

step 2 : determine the total cost of producing 5 units = 5 * $4 = $20

the cost of producing the additioanl sixth unit = $23.4 - $20 = $3.40