Table 2 Shows Media Cable’s demand table, total revenue, and marginal revenue at each price. Why, at any price lower than $130, is the marginal revenue from an additional sale less than the price? Table 2PriceAmount DemandedTotal RevenueMarginal Revenue$1600$0n/a$13090$11,700$130.00$100200$20,000$75.45$80350$28,000$53.33$40600$24,000-$16.00$0850$0-$96.00Question 1 options: a) Lowering the price means that Media Cable lowers the price on all cable packages sold, and the combination of the price effect and quantity effect work together to reduce the Marginal Revenue. b) Marginal revenue is calculated by dividing the change in quantity into the change in Total Revenue. c) The price effect tends to increase Total Revenue. d) The quantity effect tends to decrease Total Revenue. e) It cost less to provide a service in bulk.

Answer: Total revenue: total revenue is calculated by multiplying the price and quantity. Marginal…

Answered: Table 2 Shows Media Cable’s demand…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 1PA

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Table 2 Shows Media Cable’s demand table, total revenue, and marginal revenue at each price. Why, at any price lower than $130, is the marginal revenue from an additional sale less than the price?

Table 2

Price	Amount Demanded	Total Revenue	Marginal Revenue
$160	0	$0	n/a
$130	90	$11,700	$130.00
$100	200	$20,000	$75.45
$80	350	$28,000	$53.33
$40	600	$24,000	-$16.00
$0	850	$0	-$96.00

Question 1 options:

a)	Lowering the price means that Media Cable lowers the price on all cable packages sold, and the combination of the price effect and quantity effect work together to reduce the Marginal Revenue.

b)	Marginal revenue is calculated by dividing the change in quantity into the change in Total Revenue.

c)	The price effect tends to increase Total Revenue.

d)	The quantity effect tends to decrease Total Revenue.

e)	It cost less to provide a service in bulk.

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