ordonezleslie958 ordonezleslie958

25-04-2020
Business

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Suppose a monopoly concrete contractor builds 20 driveways per month for $10,000 each. In order to increase sales to 21 driveways, the contractor must lower the price of driveways to $9,500. The marginal revenue of the 21st driveway is

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sholanejo sholanejo

26-04-2020

Answer: Marginal revenue is -$500.

Explanation: The marginal revenue is calculated as the change in total revenue subtracted by the change in quantity.

Total revenue is calculated by multiplying the price by the quantity:

At a quantity of 20 driveways, the total revenue is = 20 × $10,000 = $200,000

At a quantity of 21 driveways, the total revenue is = 21 × $9,500 = $199,500

Marginal revenue = $199,500 - $200,000

= -$500

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