Question

Mimi is granted a license to sell her unique Spirit Pins at local high school lacrosse games. When Mimi prices her pins at $10, she sells 20 pins per game. When she lowers her price to $8, she sells 40 pins. The additional money she earns from dropping her price is known as the __________.

a. Output effect
b. Price effect
c. Marginal revenue
d. Opportunity cost

Answer 1

c

Step-by-step explanation:

Marginal revenue is the change revenue when quantity sold increases by one unit

Marginal revenue = change in total revenue /change in quantity sold

Mimi's marginal revenue = $10 - $8 = $2