This problem gives you a preview of something you might see in a microeconomics class.

This problem gives you a preview of something you might see in a microeconomics class. Suppose there's an appliance store that sells dishwashers. It could set its price high and sell very few dishwashers, or it could set its price low and sell many more dishwashers. The following table shows some possible choices this store could make:

The graph below plots the firm's total revenue curve: that is, the relationship between quantity and total revenue given by the two right columns in the table above. The five choices are also labeled. Finally, two black lines are shown; these lines are tangent to the green curve at points B and D

Using the information on the slope of the lines tangent to the curve at points B and D, plot the slope of the total revenue curve on the graph below (As it turns out, it's a straight line, so the two points you plot will determine a line.)

The total revenue curve reaches its maximum at a quantity of _______ dishwashers per year. At this point, the slope of the total revenue curve is _______ .

Solutions

Expert Solution

Slope of TR at various points is the marginal Revenue.

Plotting MR,we get

The total revenue reaches its maximum at a quantity of 200 dishwashers per year. At this point, the slope of the total revenue curve is equal to zero.

Rahul Sunny answered 2 years ago

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