A wine merchant will supply bottles of champagne to a wedding at £10 per bottle but is willing to offer a 10% discount on the total bill if 50 bottles or more are purchased. What would be the firm's marginal revenue for the 50th bottle?
I don't understand a thing about it and the teacher just moved on assuming everyone will know this because it is easy. I'm terrified.
Can anyone explain to me how to work out marginal revenue in this case? Watch
- Thread Starter
- 26-09-2016 17:28
- 26-09-2016 18:00
Remember that marginal revenue is the change in total revenue brought about by the sale of one more unit. So the way to answer this is to work out the Total revenue from 49 bottles (49 x £10 = £490). Then work out the Total Revenue from the sale of 50 bottles (50 x £9 (10% discount) = £450). So the MR is -£40.