Assume that Dieter Bloom is the only seller of strawberries in a small town. The following graph shows the demand (average revenue, AR) and marginal revenue (MR) curves facing Dieter. You can use the orange rectangle labelled 'Total Revenue' (square symbols) to compute total revenue at various prices along the AR curve. To see the area of the Total Revenue rectangle, scroll over the shaded area with your mouse. You will not be assessed on where you place the rectangle.
On the following graph, use the green points (triangle symbol) to plot annual total revenue at prices of €7, €6, €5, €4, €3, €2, and €1 per basket of strawberries. Be sure to use all of the points provided. Line segments will automatically connect the points.
Then, consider the quantity of strawberries at which Dieter Bloom's marginal revenue exactly equals zero. Place a grey point (star symbol) on the total revenue curve to indicate this quantity. Drop lines will automatically extend to both axes.
f Dieter sells 6,000 baskets at the highest price consumers are willing to pay according to the demand curve, his average revenue will be €
per basket.
Consider the elasticity of demand along the demand curve. Even though the cost curves are not shown, you can conclude that Dieter will produce:
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