Moriarty Music can sell 4 guitars at $350 each. To sell 5 guitars, Moriarty Music must...
Moriarty Music can sell 4 guitars at $350 each. To sell 5 guitars, Moriarty Music must lower the price to $330 each. The marginal revenue of the fifth guitar is
Homework Answers
Ans.
Price (P) Quantity(Q) Total Revenue (TR)
$350 4 guitars $1,400
$330 5 guitars $1,650
Marginal Revenue (MR) = change in TR/change in Q
MR5 = ($1,650 - $1,400)/(5 - 4) guitars
MR5 = $250
Hence, the marginal revenue of the 5th guitar is $250.
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