Question

Use the cost and revenue data to answer the questions. Quantity Price Total revenue Total cost 10 90 900 675 15 80 1200 825 20 70 1400 1025 25 60 1500 1250 30 50 1500 1500 35 40 1400 1850 If the firm is a monopoly, what is marginal revenue when quantity is 25

Answer 1

MR = 20 units

Step-by-step explanation:

QUANTITY PRICE TOTAL REVENUE TOTAL COST

10 90 900 675

15 80 1200 825

20 70 1400 1025

25 60 1500 1250

30 50 1500 1500

35 40 1400 1850

If the firm is a monopoly, what is marginal revenue when quantity is 25?

First,

A monopoly is a one-firm or one-producer market. A monopolist is a price-giver (a firm that sets whatever price that suits them) not a price taker.

Second,

Marginal revenue is the extra revenue a firm gains, for selling an extra unit of their product. When it comes to calculation, it is the division of change in total revenue by change in quantity sold.

As seen in the table/arrangement above, the fourth quantity is 25 and the total revenue from selling 25 units is 1,500. The previous quantity is 20 and total revenue from selling 20 units is 1,400.

Change in Total Revenue = 1500 - 1400 = 100

Change in quantity sold = 25 - 20 = 5

MR = 100/5 = 20

This shows that the monopoly gains 20 units of money when it sells 5 extra units of product.

If you wish to compute this for A UNIT change in commodity sold, then MR is the extra revenue from selling an extra unit of product. So, cross multiply:

20 extra units of money - 5 extra units of commodity

X extra units of money - 1 extra unit of commodity

X = 20/5 = 4

I HOPE THE TWO ANSWERS ARE CLEAR.