Find TR and MR

Price : 1,2,3,4,
Units Sold : 2,4,6,7

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Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is 10.

Quantity soldTRMRAR

0

1

2

3

4

5

6

Medium

Solution

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QUANTITY SOLD

TR

MR AR

0 0 0 -

1 10 10 10

2 20 10 10

3 30 10 10

4 40 10 10

5 50 10 10

6 60 1O 10

Total money receipts of a firm from the sale of a given output is called total revenue.

TR = OUTPUT*PRICE

Marginal revenue is the change in total revenue when one more unit of a commodity is sold.

MR= change in TR/change in quantity sold

Average revenue refers to revenue per unit of output.

AR=TR/Q

If AR is constant, MR is equal to AR. Both are indicated by the same horizontal straight line(a situation of perfect competition)

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