Question

In: Economics

Here are some true and false questions to see if you understand the revenue and profit...

Here are some true and false questions to see if you understand the revenue and profit terms and the three key rules to maximize profit. Briefly explain why you chose that answer

1)If a firm sells 200 units of its product at a price of 8 dollars, its total profit will be 1600.

2)If the average revenue from 150 units is 20 dollars, the firm's total revenue is 3000 dollars.

3)If the marginal revenue from the 21st unit is 30 dollars, then the total revenue from 22 units is 30 dollars greater than the total revenue from 21 units

4) As long as MR is greater than MC, a firm's total profit will increase if it increases its level of output.

Expert Solution

SOLUTION :-

Total revenue:- Total revenue is the sum total of money receipts by a firm from the sale of its total output.

TR = Price x Quantity

Average revenue:- Average revenue is the per unit revenue corresponding to a given level of output of a firm (AR =P).

AR = Total Revenue/ Output

Marginal revenue:- Marginal revenue is the addition to total revenue on account of sale of one more unit of output.

MR_N= TR_N - TR_N-1

Profit is the difference between Total Revenue and Total Cost

Profit = TR - TC

1) STATEMENT IS FALSE

2) STATEMENT IS TRUE

3) STATEMENT IS FALSE

4) STATEMENT IS TRUE

SEE THE IMAGE FOR EXPLANATION AND DETAILED SOLUTION

Rahul Sunny answered 2 years ago

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