alleryA monopolist's demand schedule shows total revenue of ₹ 18.00 at 2 units and ₹ 25.50 at 3 units. The marginal revenue of the 3rd unit is:
A₹ 9.00
B₹ 8.50
C₹ 7.50
D₹ 25.50
Answer & Solution
Correct answer: C. ₹ 7.50
1. Marginal revenue is the change in total revenue from one more unit.
2. TR rises from ₹ 18.00 to ₹ 25.50 as output goes from 2 to 3 units.
3. MR = 25.50 - 18.00 = ₹ 7.50.
4. Note MR ₹ 7.50 is below the 3rd unit's price of ₹ 8.50, since price was cut on earlier units too.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.12_
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