Question

Suppose that in Figure 24-4, the monopolist knows that if it were to reduce the price of its product to $5.40 per unit, the quantity demanded-and hence its output-would rise to 13 units per week. What would be the marginal revenue that the monopolist would derive from producing and selling the 13th unit?

Short answer

The marginal revenue is $\$3$

Step-by-step solution

Introduction

A monopoly is a solitary dealer. In regulation, syndication is a business element that has huge market power, that is to say, the ability to charge excessively exorbitant costs, which is related to a decline in friendly excess.

Explanation

Given,

When the price of the product is $\$5.40$then output = $13$units

Total revenue = Average revenue$\times$output quantity

$=5.40\times 13=\$70.29$

Marginal revenue earned from the $13th$unit is

Total revenue from data-custom-editor="chemistry" $13\mathrm{th}$unit - Total revenue from $12th$unit

$$\begin{gathered} =\mathrm{\$}70.20-\mathrm{\$}67.20 \\ =\$3 \end{gathered}$$