Sal\'s Pizza Shop has a unique recipe for pizza, and currently its optimal price

Question

Sal's Pizza Shop has a unique recipe for pizza, and currently its optimal price is $20 per pizza at a quantity of 200 pizzas per week. Its marginal cost is $12 per pizza when it produces fewer than 180 pizzas per week. The marginal cost is $15 per pizza when it produces 180 to 210 pizzas per week. The marginal cost is $18 per pizza when it produces between 211 and 300 pizzas per week. The staff cannot produce more than 300 pizzas per week. Assuming that fixed costs are $300 per week, its marginal revenue from the 200th pizza sold this week is: a) $20 b) $12 c) $15 d) $17.57 Please show work

Explanation / Answer

Marginal revenue: Marginal revenue is a additional revenue generated to the firm by selling one additional unit.

So, by selling one unit of Pizza Sal's Pizza Shop will get $20.

Therefore, ts marginal revenue from the 200th pizza sold this week is $20.

Hence, Option a. $20 is correct.

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