Say for a monopoly consumers in a market want a total of 2 units if the...
Say for a monopoly consumers in a market want a total of 2 units if the price is $6. What is total revenue?
Then say for the same monopoly consumers in the market want a total of 3 units if the price is $5. What is total revenue?
What is the marginal revenue of the third unit?
True or False - in this example on the third unit the marginal revenue is equal to the price on the third unit?
Homework Answers
Total revenue is the product of price and quantity. For a price of $6 and a quantity of 2 units, total revenue is 2 x 6 or $12
When the price is $5 the quantity is 3 units which means total revenue is $15
The additional revenue generated by the third unit is $3. This is the marginal revenue of the third unit
False it is less than the price.
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