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Question
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
|
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
|
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
−5 |
Solution
|
Quantity |
MR |
TR |
AR |
Ed=`(DeltaQ)/(DeltaP) xxP/Q` |
|
1 |
10 |
10 |
`10/1 = 10` |
− |
|
2 |
6 |
10 + 6 = 16 |
`16/1 = 8` |
`1/2xx10/2=5` |
|
3 |
2 |
16 + 2 = 18 |
`18/3 = 6` |
`1/2xx8/2 =2` |
|
4 |
2 |
18 + 2 = 20 |
`20/4 =5` |
`1/1xx6/3=2` |
|
5 |
2 |
20 + 2 = 22 |
`22/5 = 4.5` |
`1/0.5xx5/4=2.5` |
|
6 |
0 |
22 + 0 = 22 |
`22/6 = 3.6` |
`1/0.9xx4.5/5=1` |
|
7 |
0 |
22 |
`22/7 = 3.1` |
`1/0.5xx3.6/6 = 1.2` |
|
8 |
0 |
22 |
`22/8 = 2.7` |
`1/0.4xx3.1/7 = 1.1` |
|
9 |
−5 |
22 − 5 = 17 |
`17/9 =1.9` |
`1/0.8xx2.7/9 =0.38` |
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