2.Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price...
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2.Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $50 to $650 per bicycle. The marginal revenue of the 11th bicycle is
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Homework Answers
Answer: $150
Find: Marginal revenue of the 11th bicycle
Calculation:
When Quantity = 10, Price = $700
Total revenue = Price * Quantity
Total revenue = $700 * 10
Total revenue = $7000
==================================
When Quantity = 11, Price = $650
Total revenue = Price * Quantity
Total revenue = $650 * 11
Total revenue = $7150
=================================
Marginal revenue of (n) = Total revenue of (n) - Total revenue of (n-1)
MR11 = TR11 - TR10
MR11 = $7150 - $7000 = $150
The marginal revenue of the 11th bicycle is $150.
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2.Suppose a monopoly firm produces bicycles and can sell 10
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Question 2: Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $100 to $600 per bicycle. What is the marginal revenue of the eleventh bicycle?
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coming year. The bicycles sell for $630 each.
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