10 In the figure to the right, consider the marginal revenue of the eighth unit

Question

10 In the figure to the right, consider the marginal revenue of the eighth unit sold. When the firm cuts the price from $6.00 to $5.60 to sell the eighth unit, the area in the graph denoting the output effect is given by p $6.00 $5.60 ..........ar In dollars, this effect is $L Enter your response rounded to the nearest cent) When the firm cuts the price from S6.00 to S5.60 to sell the eighth unit, the area in the graph denoting the price effect is given by Quantity C x B In dollars, this effect is S (Enter your response rounded to the nearest cent) The marginal revenue of the eighth unit is therefore equal to Enter your response rounded to the nearest cent

Explanation / Answer

Ans: when price is $6 and quantity is 7 , marginal revenue will be $42(7*6). If price falls to $5.60 and quantity raises to 8, marginal revenue will $44.8(8*5.60). There is raise of $2.8 in marginal revenue.

Output effect is denoting by C

Price effect is denoting by B*C

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