Question

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

Hint:

In a perfectly competitive market, the marginal revenue is constant and equal to the price per unit, as shown in this example.

Answer 1

Step 1: Understanding the terms.
- Total Revenue (TR) is the total income from sales, calculated by multiplying the quantity sold by the price per unit. - Marginal Revenue (MR) is the change in total revenue when an additional unit is sold, i.e., the difference in TR as the quantity increases. - Average Revenue (AR) is the total revenue divided by the quantity sold, i.e., \( AR = \frac{TR}{Quantity} \).

Step 2: Calculation.
\[ \text{TR} = \text{Price per unit} \times \text{Quantity Sold} \] \[ \text{MR} = \Delta \text{TR} / \Delta \text{Quantity Sold} \] \[ \text{AR} = \frac{\text{TR}}{\text{Quantity Sold}} \]

Step 3: Filling the table.
For each quantity, calculate TR, MR, and AR using the formulas above: \[ \begin{array}{|c|c|c|c|} \hline \text{Quantity Sold} & \text{TR} & \text{MR} & \text{AR} \\ \hline 0 & 0 & - & - \\ 1 & 10 & 10 & 10 \\ 2 & 20 & 10 & 10 \\ 3 & 30 & 10 & 10 \\ 4 & 40 & 10 & 10 \\ 5 & 50 & 10 & 10 \\ 6 & 60 & 10 & 10 \\ \hline \end{array} \]

Step 4: Conclusion.
The calculations for TR, MR, and AR for each quantity are completed as shown in the table.