The table below captures the relevant portion of a demand schedule facing a monopolist.

A Demand Schedule Facing a Monopolist

Price Quantity
$10 1
$9 2
$8 3
$7 4
$6 5

Refer to the table above. What is the marginal revenue associated with selling the 3rd unit of output?

Question

The table below captures the relevant portion of a demand schedule facing a monopolist.

A Demand Schedule Facing a Monopolist

Price	Quantity
$10	1
$9	2
$8	3
$7	4
$6	5

Refer to the table above. What is the marginal revenue associated with selling the 3rd unit of output?

BlackTom AI · Accepted Answer

Marginal revenue equals the change in total revenue (TR) when output increases by one unit. For a monopolist facing a downward‑sloping demand curve, selling an additional unit requires lowering price on all units, so MR is generally less than the price of that extra unit.

Step 1 — compute total revenue at relevant quantities:
- TR(Q=1) = P(1) × 1 = $10 × 1 = $10
- TR(Q=2) = P(2) × 2 = $9 × 2 = $18
- TR(Q=3) = P(3) × 3 = $8 × 3 = $24
(You can continue: TR(4)= $7×4 = $28; TR(5)= $6×5 = $30.)

Step 2 — compute marginal revenue for the 3rd unit:
Marginal revenue for the 3rd unit = TR(Q=3) − TR(Q=2) = $24 − $18 = $6.

Intermediate calculations shown above confirm the change in TR is $6 when quantity rises from 2 to 3.

Why this is correct:
- MR is defined as ΔTR/ΔQ; here ΔQ = 1, so MR = ΔTR = $6.
- Note that the price of the 3rd unit is $8, but MR ($6) < price because the monopolist must reduce the price on all units to sell the additional unit.

Why the other options are incorrect:
- $24 is total revenue at Q=3, not marginal revenue.
- $8 is the price at Q=3, not the marginal revenue (price ≠ MR for a monopolist facing a downward demand curve).
- $2.67 has no basis in the ΔTR calculation here; the correct ΔTR is $6 (not $2.67).

Conclusion: The marginal revenue associated with selling the 3rd unit is $6, which matches the provided answer.

The table below captures the relevant portion of a demand schedule facing a monopolist. A Demand Schedule Facing a Monopolist Price Quantity $10 1 $9 2 $8 3 $7 4 $6 5 Refer to the table above. What is the marginal revenue associated with selling the 3rd unit of output?Single choice

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