Question

3 Egyptian band, "West el Balad," have just finished recordin their latest CD. Their record company's marketing departmernt determines that the demand for the CD is as follows: na ch er Number of CDs 10 000 20 000 30 000 40 000 50 000 60 000 Price $24 20 18 16 14 The company can produce the CD with no fixed cost and a variable cost of $5 per CD. a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold?

Answer 1

P	Q	TR=P*Q	MR
24	10000	240000
22	20000	440000	20
20	30000	600000	16
18	40000	720000	12
16	50000	800000	8
14	60000	840000	4

the total revenue is calculated by multiplying the price of the commodity with quantity demanded

TR = Price*Quantity (P*Q). The marginal revenues are calculated by the formula

MR = Change in TR/Change in Q

for MR corresponding to demand of 20000 units, MR = (440000-240000)/(20000-10000) = 20