Hi Phi Sound Unlimited Has a Monopoly Over the Installation

question 65

Multiple Choice

Hi Phi Sound Unlimited has a monopoly over the installation of surround sound systems. If Hi Phi Unlimitedʹs total revenue from installing 20 sound systems is $30,000 and its total revenue from installing 21 sound systems is $30,800, what is the marginal revenue of the twenty-first sound system?

• A) -$1,500
• B) -$700
• C) $800
• D) $1,467

---

Definitions:

Excess Capacity

A situation where a company can produce more goods or services than currently demanded by the market, indicating underutilization of resources.

Allocated Fixed Costs

Fixed costs that are assigned or distributed across different departments, products, or activities within a company for budgeting and accounting purposes.

Direct Fixed Manufacturing Costs

Fixed costs directly associated with the manufacturing process, such as salaries of production supervisors.

Discontinue

The process of ending the production and sale of a product or service, often due to strategic reevaluation or lack of success.