Quantity demanded Price Total revenue Marginal revenue Price elasticity 0 $700 $
ID: 1185904 • Letter: Q
Question
Quantity demanded
Price
Total revenue
Marginal revenue
Price elasticity
0
$700
$_____
1
650
_____
$_____
_____
2
600
_____
_____
_____
3
550
_____
_____
_____
4
500
_____
_____
_____
5
450
_____
_____
_____
6
400
_____
_____
_____
7
350
_____
_____
_____
8
300
_____
_____
_____
9
250
_____
_____
_____
10
200
_____
_____
_____
11
150
_____
_____
_____
12
100
_____
_____
_____
13
50
_____
_____
_____
14
0
_____
_____
_____
a. Complete the table by computing total revenue, marginal revenue, and the price elasticity of demand (use midpoints formula).
b. The relationships in the table indicate that
(1) total revenue rises from $0 to a maximum of $_________ as price falls from $700 to $_________, and as price falls to $0, total revenue falls from its maximum to $_________;
(2) the relationship between price and total revenue suggests that demand is price (elastic, inelastic) _______________ when quantity demanded is between 0 and 7 units of output, but that demand is price (elastic, inelastic) ________________ when quantity demanded is between 8 units and 14 units;
(3) when demand is price elastic and total revenue rises from $0 to a maximum, marginal revenue is (negative, positive) _______________, but when demand is price inelastic and total revenue falls from its maximum, marginal revenue is _______________.
c. Use the data in the previous table and the following graph to plot and graph the demand curve and the marginal revenue curve for the monopolist. Indicate the portion of the demand curve that is price elastic and the portion that is price inelastic.
Quantity demanded
Price
Total revenue
Marginal revenue
Price elasticity
0
$700
$_____
1
650
_____
$_____
_____
2
600
_____
_____
_____
3
550
_____
_____
_____
4
500
_____
_____
_____
5
450
_____
_____
_____
6
400
_____
_____
_____
7
350
_____
_____
_____
8
300
_____
_____
_____
9
250
_____
_____
_____
10
200
_____
_____
_____
11
150
_____
_____
_____
12
100
_____
_____
_____
13
50
_____
_____
_____
14
0
_____
_____
_____
Explanation / Answer
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