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Suppose a monopoly firm produces a medical device and can sell 15 items per month at a price of $2,000 each. In order to increase sales by one item per month, the monopolist must lower the price of its medical device by $100 to $1,900. The marginal revenue of the 16th item is: Group of answer choices

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Answer: $400

Explanation:

Marginal Revenue is the revenue that is added by one additional unit.

When the product was selling at $2,000 it sold 15 units meaning the total revenue was;

= 2,000 * 15

= $30,000

When the product started selling for $1,900 it would be able to sell 16 units so the total Revenue is;

= 16 * 1,900

= $30,400

The difference in total Revenue is as a result of 1 extra unit, the 16th unit which contributed an amount of;

= 30,400 - 30,000

= $400

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