Academic help online

Suppose the revenue function for a company can be defined as; TR = Price (P) x Quantity (Q) If Q = 100 –P is the demand curve: a. What is the total revenue function for this firm in terms of P? TR = P x (100 – P) = 100P – P2 b. What is the total revenue function for this firm in terms of Q? TR = (100 – Q) x Q = 100Q – Q2 c. What level of production (Q) would maximize sales revenue? MR = 100 – 2Q = 0 100 = 2Q Q = 50 d. What is the extra or marginal revenue associated with an additional unit sold? MR = (1 x 100 x Q1-1) – (2 x 1 x Q 2-1) = 100 – 2Q Why is it not equal to the price? Marginal revenue is the change in revenue as the firm sells another unit of output. Because the firm has to cut its price to sell another unit, it makes that price on the additional unit, but earns less on all the units it could have sold at the higher price. Because of this effect on the amount earned on other units, the marginal revenue will always be less than the price. e. What is the price level that maximizes sales? P = 100 – Q = 100 – 50 = 50 f. Can the firm independently choose price and quantity to maximize total revenue?

All Rights Reserved,
Disclaimer: You will use the product (paper) for legal purposes only and you are not authorized to plagiarize. In addition, neither our website nor any of its affiliates and/or partners shall be liable for any unethical, inappropriate, illegal, or otherwise wrongful use of the Products and/or other written material received from the Website. This includes plagiarism, lawsuits, poor grading, expulsion, academic probation, loss of scholarships / awards / grants/ prizes / titles / positions, failure, suspension, or any other disciplinary or legal actions. Purchasers of Products from the Website are solely responsible for any and all disciplinary actions arising from the improper, unethical, and/or illegal use of such Products.