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10 November, 13:42

Dave sells 4 gallons of milk at $5 per gallon. If he increases his sales to 5 gallons at the same price per gallon, calculate Dave's marginal revenue from selling milk.

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  1. 10 November, 15:33
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    Dave's marginal revenue from selling milk is $ 5.

    Explanation:

    This problem requires us to calculate Dave's marginal revenue from selling milk. The marginal revenue is calculated by subtracting current reveue form the expected or forecasted revenue. Detail calculation is given below.

    Current reveune = 4 * 5 = 20 dollars - A

    Expected Reveunue = 5 * 5 = 25 dollars - B

    Marginal revenue = A-B = 25 - 20 = $ 5
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