Question

Use the following demand schedule to determine total revenue and marginal revenue for each possible level of sales. Instructions: Enter your answers as whole numbers. Product Price Quantity Demanded Total Revenue Marginal Revenue NNNNNN a. What can you conclude about the structure of the industry in which this firm is operating? The industry is purely monopolistic. The industry is purely oligopolistic. The industry is monopolistically competitive. The industry is purely competitive. b. Graph the total-revenue and marginal-revenue curves for this firm. Instructions: (1) On the diagram on the left, use the tool provided 'TR' to plot the total-revenue curve (plot 6 points total for q = 0.1.2.3. 4. and 5). (2) On the diagram on the right, use the tool provided 'MR' to plot the marginal-revenue curve (plot 6 points total for q = 0.1. 12. 3. 4. and 5). Total Revenue Marginal Revenue Tools Tools MR Price Price 1 2 4 5 6 2 3 4 5 6 3 Quantity Quantity

Answer 1

Ans.

Product Price(P)	Quantity demand(Qd)	Total Revenue(TR)	Marginal Revenue(MR)
$2	0	0	---
$2	1	$2	$2
$2	2	$4	$2
$2	3	$6	$2
$2	4	$8	$2
#2	5	$10	$2

Note- 1) TR = P x Q

2) MR = change in TR/ change in Q

a) d. The industry is purely competitive.

Because every firm is a price taker and has a negligible effect on the market price. Market price decided by the supply and demand forces in the market.

b)

MR Quantity - Revenue • Marginal cardo a ons ma - Reice Onantity Toted Revenue era ny md - 0 Buice

c) a. Demand is perfectly elastic; MR is constant and equal to P

In the competitive market, every firm is a price taker, so, to sell every unit of goods, the producer will charge the same price which leads to elastic demand curve and price is constant which leads to marginal revenue constant and equal to the price

d) True,

Marginal Revenue (MR) = change in TR/ change in Q