Multiple Choice
Suppose a firm's total revenue increases from 100 to 108 when it sells the 11th unit of output. What is the marginal revenue received from the 11th unit?
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0. Basic Principles of Economics
Marginal Analysis
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Refer to Table 14-4. If the total revenue from selling 2 units is \$40 and the total revenue from selling 3 units is \$54, what is the marginal revenue from selling the 3rd unit?
A
\$27
B
\$40
C
\$14
D
\$54
Verified step by step guidance1
Understand that marginal revenue (MR) is the additional revenue gained from selling one more unit of a good or service.
Identify the total revenue (TR) at the quantity before the additional unit is sold. Here, TR when selling 2 units is \$40.
Identify the total revenue at the new quantity after selling the additional unit. Here, TR when selling 3 units is \$54.
Calculate the marginal revenue from selling the 3rd unit by subtracting the total revenue at 2 units from the total revenue at 3 units using the formula: \(MR = TR_{3} - TR_{2}\).
Substitute the values into the formula: \(MR = 54 - 40\) to find the marginal revenue from the 3rd unit.
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