Question 5
MediumOriginal questionA firm can sell more only by lowering its price.
| Output | 1 | 2 | 3 | 4 | 5 | 6 |
|---|---|---|---|---|---|---|
| Price (₹) | 20 | 18 | 16 | 14 | 12 | 10 |
What is the marginal revenue of the 3rd unit?
Show the answer and explanation
CorrectNot quiteAnswer A
Correct answer: A
Explanation
TR₂ = 18 × 2 = ₹36; TR₃ = 16 × 3 = ₹48.
MR₃ = 48 − 36 = ₹12, less than the price of ₹16.
Worth noting
₹16 is the price (AR) of the 3rd unit; MR is lower because the first two units now also sell for less.
- Concept
- MR below price
- Typical timeTypical
- 70 s
- Your timeYours
- —
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