ECON 1001 Lecture Notes - Lecture 9: Demand Curve, Marginal Revenue

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rubyllama377

27 Mar 2018

School

Department

Economics

Course

ECON 1001

Professor

Erhardt

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Document Summary

Revenue is the money receipts from the sale of a product. It is the sum of all sale receipts or income of a firm. Example: 100 units of icecream are sold at the rate of 5 per unit. Total revenue = marginal revenue: average revenue. It refers to revenue per unit of output sold. If tr = 1000 and q = 100 ar = 1000/100 =10 average revenue. = total revenue / quantity: marginal revenue. It the increase in total revenue when one extra unit is sold. It is the change in total revenue on account of the sale of one more unit of output sold. Marginal revenue = total revenue n total revenue (n-1) The relationship between average revenue and marginal revenue. The relationship between average revenue and marginal revenue is. If average revenue is constant, average revenue = marginal revenue and both are represented by a horizontal straight line parallel to the x axis.

Related Questions

A small firm faces an inverse demand function of P = 100 - Q. Its total cost function is given by TC = .5Q2. (You should see right away that marginal revenue is thus MR = 100 - 2Q, and it also happens that marginal cost is just MC = Q. Both MR and MC are the first derivatives of total revenue and total cost. And a quick comment on MC: unlike some marginal cost functions we've seen, this one is not constant, because marginal cost is getting $1 higher with each additional unit of output.)

The Chief Executive Officer will manage the firm, choosing output and price. Currently, the CEO is negotiating an incentive-based contract with the shareholders of the company.
(Hint: basing compensation on revenue will motivate revenue maximization rather than profit maximization!)

Hint: since the plan creates incentives for the CEO to maximize revenue rather than profit, you should not set MR = MC at this point. BIG hint: revenue is maximized when selling an additional unit won't increase your revenue, or in math terms, when MR = 0.)

Owners' proposal: CEO keeps 10% of TR.

Firm price:
Firm output:
Total revenue:
Firm profit:
CEO compensation:
Remaining profit for owners:

redfrog477

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit), and this is equal to the (total cost , quantity of output total price or total profit).

(each are fill in the blank and need one of the terms listed).

ultramarinewoodchuck739

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit) , and this is equal to the (total cost , quantity of output, total price or total profit) .

(each are fill in the blank and need one of the terms listed).

greymouse802

ECON 1001 Lecture Notes - Lecture 9: Demand Curve, Marginal Revenue

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