Question
Calculate Minnie's marginal revenue schedule and draw a graph of the market demand curve and Minnie's marginal revenue curve. Explain why Minnie's marginal revenue is less than the price.
Step 1
Given the prices are 10, 8, 6, 4, 2, and 0, and the quantities are 1, 2, 3, 4, and 5, we can calculate the marginal revenue by subtracting the revenue of the previous quantity from the revenue of the current quantity. The marginal revenues are 0, 8, 4, 0, -4, and Show more…
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Use the following demand schedule to determine total revenue and marginal revenue for each possible level of sales: $$\begin{array}{|cccc|} \hline \begin{array}{c} \text { Product } \\ \text { Price } \end{array} & \begin{array}{c} \text { Quantity } \\ \text { Demanded } \end{array} & \begin{array}{c} \text { Total } \\ \text { Revenue } \end{array} & \begin{array}{c} \text { Marginal } \\ \text { Revenue } \end{array} \\ \hline \$ 2 & 0 & \$ \text{_____} & \text{_____} \\ 2 & 1 & \text{_____} & \$ \text{_____} \\ 2 & 2 & \text{_____} & \text{_____} \\ 2 & 3 & \text{_____} & \text{_____} \\ 2 & 4 & \text{_____} & \text{_____} \\ 2 & 5 & \text{_____} & \text{_____} \\ \hline \end{array}$$ a. What can you conclude about the structure of the industry in which this firm is operating? Explain. b. Graph the demand, total-revenue, and marginal-revenue curves for this firm. c. Why do the demand and marginal-revenue curves coincide? d. "Marginal revenue is the change in total revenue associated with additional units of output." Explain verbally and graphically, using the data in the table.
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