Marginal Revenue from Selling Fifth Unit

A firm can sell 1 unit at $9 or 2 units at $8 or 3 units at $7, and so on. What is the marginal revenue from the sale of the fifth unit?

$0

$4

$5

$1

To determine the marginal revenue from the sale of the fifth unit, we first need to understand how the price changes as more units are sold.

From the information given:

• Selling 1 unit: Price = $9
• Selling 2 units: Price = $8 (total revenue = 2 * $8 = $16)
• Selling 3 units: Price = $7 (total revenue = 3 * $7 = $21)
• Selling 4 units: Price = $6 (total revenue = 4 * $6 = $24)
• Selling 5 units: Price = $5 (total revenue = 5 * $5 = $25)

Now, we can calculate the total revenue for selling 4 units and for selling 5 units:

• Total revenue for 4 units = 4 * $6 = $24
• Total revenue for 5 units = 5 * $5 = $25

Now, we can find the marginal revenue from selling the fifth unit by calculating the change in total revenue when increasing the quantity sold from 4 to 5 units:

• Marginal Revenue = Total Revenue from 5 units - Total Revenue from 4 units
• Marginal Revenue = $25 - $24 = $1

Therefore, the marginal revenue from the sale of the fifth unit is $1.