Question

A monopolist can sell 200 units of output for $36 per unit. Alternatively, it can sell 201 units of output for $35.80 per unit. The marginal revenue of the 201st unit of output is

Answer 1

There is a negative marginal revenue from the sale of 201st units of - $4.2

Step-by-step explanation:

The marginal revenue is the revenue of the additional unit of output sold. Thus, the marginal revenue is the revenue earned from the 201st unit of the output sold. To calculate the marginal revenue of the 201st unit, we will calculate the total revenue for 200 units and deduct it from the total revenue for 201 units.

Total revenue - 200 Units = 200 * 36 = $7200

Total revenue - 201 Units = 201 * 35.8 = $7195.8

Marginal revenue - 201st unit = 7195.8 - 7200 = - $4.2

There is a negative marginal revenue from the sale of 201st units of - $4.2