Compute of total revenue, marginal revenue and revenue maximizing output.
Given the output (Q) and price (P) data in the following table, find out total revenue (TR) and marginal revenue (MR):
Q
|
P
|
TR = P×Q
|
MR = ∂TR/∂Q
|
0
|
$10
|
|
|
1
|
9
|
|
|
2
|
8
|
|
|
3
|
7
|
|
|
4
|
6
|
|
|
5
|
5
|
|
|
6
|
4
|
|
|
7
|
3
|
|
|
8
|
2
|
|
|
9
|
1
|
|
|
10
|
0
|
|
|
a.Graph these data using "dollars" on the vertical axis and "quantity" on the horizontal axis. At what output is revenue maximized?
b.Why is marginal revenue less than average revenue at each price level?