Question

In: Economics

When the monopoly firm sells two units of its product, it earns total revenue of $260...

When the monopoly firm sells two units of its product, it earns total revenue of $260 and it incurs a total cost of $210. If its marginal revenue for the second unit was $110, what was the marginal revenue of the first unit?

Group Choice Answers:

$100

$150

$133

$220

There is not enough information to answer the question.

Solutions

Expert Solution

Total revenue is the total of marginal revenue

TR=MR

TR(2)=MR(1)+MR(2)

260=MR(1)+110

MR(1)=260-110=150

The marginal revenue of the first unit is $150

Option 2


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