The demand for a product is 25 units when the price is Rs. 10, however if the price is reduced to Rs. 9 but the demand goes to 26 units. What is the marginal revenue from sale of 26th unit?
The demand for a product is 25 units when the price is Rs. 10, however if the price is reduced to Rs. 9 but the demand goes to 26 units. What is the marginal revenue from sale of 26th unit?
The correct option is B Rs. (-16)
Marginal revenue refers to the change in revenue or additional revenue which a firm earns on selling a unit more of its output. It is calculated by dividing the change in total revenue by change in total quantity of commodity sold.
Marginal revenue = Change in total revenue/ Change in quantity of commodity sold.
Change in total revenue = Rs. ( 26 x 9 - 25 x 10)
= Rs. (234 - 250)
= Rs. (-16)
Change in quantity sold = (26 - 25) units
= 1 unit
Marginal revenue = Rs. (-16) / 1 unit = Rs. (-16).
Marginal revenue refers to the change in revenue or additional revenue which a firm earns on selling a unit more of its output. It is calculated by dividing the change in total revenue by change in total quantity of commodity sold.
Marginal revenue = Change in total revenue/ Change in quantity of commodity sold.
Change in total revenue = Rs. ( 26 x 9 - 25 x 10)
= Rs. (234 - 250)
= Rs. (-16)
Change in quantity sold = (26 - 25) units
= 1 unit
Marginal revenue = Rs. (-16) / 1 unit = Rs. (-16).
