A T-shirt manufacturer has recently increased its output from 1,500 T-shirts to 2,000 T-shirts each month. The increase in production has raised total operating costs from $20,000

Question

to $22,000
. Given that the market price for T-shirts is $20
per shirt, the marginal revenue of the 2,000th T-shirt is _____.(1 point)
Responses

$4
4 dollars

$10,000
10,000 dollars

$20
20 dollars

$2,000

Answer 1

To find the marginal revenue of the 2,000th T-shirt, we can use the formula for marginal revenue, which is the change in total revenue (TR) from selling an additional unit of output.

1. Calculate the total revenue when 1,500 T-shirts are sold: \[ TR_{1500} = 1500 \times 20 = 30,000 \text{ dollars} \]

2. Calculate the total revenue when 2,000 T-shirts are sold: \[ TR_{2000} = 2000 \times 20 = 40,000 \text{ dollars} \]

3. Calculate the change in total revenue (TR): \[ \Delta TR = TR_{2000} - TR_{1500} = 40,000 - 30,000 = 10,000 \text{ dollars} \]

4. Since we increased output from 1,500 to 2,000 T-shirts, the change in output is: \[ \Delta Q = 2000 - 1500 = 500 \text{ T-shirts} \]

5. Now, calculate the marginal revenue (MR): \[ MR = \frac{\Delta TR}{\Delta Q} = \frac{10,000}{500} = 20 \text{ dollars} \]

Thus, the marginal revenue of the 2,000th T-shirt is $20.