a) Suppose that you learned the demand curve for your company's product is given by the...

a) Suppose that you learned the demand curve for your company's product is given by the following table:

Quantity Demanded (Units)	Total Revenue (Dollars)
12	120
13	130
14	140
15	150
16	160

Refer to Table 1. For your company, what is the average revenue and the marginal revenue when 14 units are produced and sold?

	a.	average revenue is $10, marginal revenue is $14.
	b.	average revenue is $140, marginal revenue is $140.
	c.	average revenue is $140, marginal revenue is $10.
	d.	average revenue is $10, marginal revenue is $10.

b) Continue from Table 1 in question (a), your company is MOST LIKELY to be in which type of market structure?

	a.	monopoly
	b.	oligopoly
	c.	perfect competition
	d.	monopolistic competition

Solutions

Expert Solution

Ans.a- (D)

Average revenue = Total revenue/ Quantity = 140/14 = 10

Marginal revenue = change in total revenue / change in quantity = (140-130)/(14-13) = 10

Ans.b- (C)

AR = MR is true only for perfectly competitive firm. Therefore, your company is most likely to be in perfectly competitive structure.

Rahul Sunny answered 1 year ago

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