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 5 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.