Eco Energy is a monopolistically compesitive producer of a s

Eco Energy is a monopolistically compesitive producer of a sports beverage called Power On. The table to the right shows the e\'s demand and cost schedules What is the marginal proft from producing and selling the 5th case? O A. $275 OB. $145 O C. $35 130

Solution

Option (D).

Marginal revenue (MR) = Change in total revenue (TR) / Change in quantity

Marginal cost (MC) = Change in total cost (TC) / Change in quantity

For the 5th unit,

MR = $(275 - 240) / (5 - 4) = $35/1 = $35

MC = $(130 - 115) / (5 - 4) = $15/1 = $15

Marginal profit = MR - MC = $(35 - 15) = $20