question archive Fernando has a monopoly on sales of pizzas in the small town of North Key Largo, Florida
Fernando has a monopoly on sales of pizzas in the small town of North Key Largo, Florida
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Fernando has a monopoly on sales of pizzas in the small town of North Key Largo, Florida.
Use the following information on the demand for Fernando's pizzas to answer the question:
| Price | Quantity Demanded |
| $30 | 0 |
| 25 | 1 |
| 20 | 2 |
| 15 | 3 |
| 10 | 4 |
| 5 | 5 |
| 0 | 6 |
If Fernando is able to engage in perfect price discrimination, his total revenue for 3 units will be $_____. The marginal revenue of the third unit is $_____.
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The total revenue is computed by adding up the sales price of every unit sold
- In this case, the quantity sold is 3 units and the price varies according to the unit sold since this is an example of perfect price discrimination.
| Selling Price | Unit # |
| $25 | 1 |
| $20 | 2 |
| $15 | 3 |
Therefore, total revenue is:
Total revenue = 25 + 20 + 15
Total revenue = $60
The answer is $60.
The marginal revenue is the extra revenue generated by selling that third pizza.
- In this case, the marginal revenue is $15 as see in the table above.
