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Suppose a firm lowers its price to $10, raising the quantity sold from 4 to 5...

Suppose a firm lowers its price to $10, raising the quantity sold from 4 to 5 units. If the marginal revenue of the fifth unit is $2, the firm must have lowered its price by:

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Answer #1

Marginal revenue is the change in total revenue due to producing or selling an additional unit of output.

In the given example the firm's marginal revenue is $2 when it increases its output sale from 4 to 5 units.

Let P be the price at which firm was selling 4 units of output.

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