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25 January, 18:42

If a monopolist increases sales from 100 to 101 units of output by lowering its price from $4.00 to $3.99, its marginal revenue for moving from 100 units to 101 units of output would be

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Answers (2)
  1. 25 January, 19:03
    0
    Marginal revenue is $2.99

    Explanation:

    Monopoly simply means the market structure which is featured by one seller, selling a unique product in the market.

    A monopolist is a person, team, or company which has controlling power over all the market for a particular good or service.

    Marginal Revenue is the additional revenue generated when product sales are increased by one unit.

    Solution

    Initial Revenue = $4 X 100 = $400

    Total Revenue = $3.99 X 101 = $402.99

    Therefore, change in Total Revenue = $402.99 - $400 = $2.99

    Change in quantity = 101 - 100 = 1

    Marginal Revenue = change in Total Revenue/change in Quantity = $2.99/1 = $2.99

    Therefore, Marginal Revenue = $2.99
  2. 25 January, 19:52
    0
    Marginal revenue is $2.99

    Explanation:

    A monopoly is defined as a situation where a single supplier determines the price and amount of a good that will be supplied.

    Marginal revenue is defined as the additional revenue that is earned from increased unit of sale of a product.

    The initial revenue earned is 100 units * $4 = $400.

    The present revenue is 101 units * $3.99 = $402.99

    Therefore the additional revenue is 402.99-400 = $2.99
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