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5 July, 10:21

Suppose that the only café in town can sell five fish dinners per night at a price of $10 each. If this monopoly firm wants to sell six fish dinners, it must reduce the price to $9 each. When the business pursues this strategy to increase sales, the marginal revenue from the sixth dinner sold is:

a. $4.

b. $54.

c. $9.

d. $50.

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Answers (1)
  1. 5 July, 10:26
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    a.$4

    Explanation:

    initial price of fish dinner per piece was = $10

    no. of fish dinner sold = 5

    total initial revenue = 5*10 = $50

    new price of fish dinner = $9

    and now six fish dinners are sold

    new revenue = 6*9 = $54

    therefore the marginal revenue from the sixth dinner sold = 54-50 = $4

    hence option a is correct
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