Arturo runs a Taco Bell franchise. He is selling 250 Gordita Supremes per week at a price of $2.75. If he lowers the price to $2.70, he will sell 251 Gordita Supremes. What is the marginal revenue of the 251st Gordita Supreme? If selling the extra

Gordita Supreme adds $0.20 to Arturo's costs, what will be the effect on his profit from selling 251 Gordita Supremes instead of 250?

What will be an ideal response?

The marginal revenue of the 251st Gordita Supreme is ($2.70 × 251 ) - ($2.75 × 250 ) = -$9.80. If selling the extra Gordita Supreme adds $0.20 to Arturo's costs, and selling 1 extra Gordita Supreme decreases his total revenue by $9.80, his profit will decrease by $9.80 + $0.20 = $10.00.