Refer To The Diagram Above In This Instance: The Marginal Re

Refer To The Diagram Above In This Instance The Marginal Revenue

11. Refer to the diagram above. In this instance, the marginal revenue curve a. reflects a perfectly competitive firm b. is equal to the price of the good c. is a horizontal straight line d. reflects each of the above 12. Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals a. $1.00 b. $15.00 c. Zero d. $20.00

Paper For Above instruction

The questions provided revolve around fundamental principles of microeconomics, particularly concerning the concepts of marginal revenue and total revenue within different market structures. These are crucial for understanding how firms make production decisions and their revenue maximization strategies.

Question 11 addresses the nature of the marginal revenue (MR) curve and its relation to market structure. In a typical perfectly competitive market, the demand curve faced by an individual firm is perfectly elastic, meaning it is horizontal at the market price. Consequently, the marginal revenue in this scenario is equal to the price of the good because every additional unit sold adds exactly the market price to total revenue. Therefore, in the context of the diagram, if the MR curve is horizontal, it reflects a perfectly competitive firm where MR equals price.

Furthermore, the options indicate different characteristics of the MR curve. Option (a) suggests that the MR curve reflects a perfectly competitive firm, which is generally true because of the horizontal demand curve. Option (b) states that MR is equal to the price of the good, which holds because each added unit sold adds a marginal amount equal to the market price in perfect competition. Option (c) suggests that the MR curve is a horizontal straight line, which exactly describes the MR curve in perfect competition. Lastly, option (d) proposes that the MR curve reflects each of the above, reinforcing that in a perfect competition, the MR curve is indeed horizontal, equal to the price, and characteristic of a competitive firm.

Moving to Question 12, the focus shifts to understanding total revenue calculations given specific data for the quantity produced. Total revenue (TR) is calculated as the product of the quantity sold (Q) and the price per unit (P): TR = Q × P. In the question, TR at a Q level of 4 needs to be determined based on the provided options.

If the table data specified a price per unit or total revenue at other quantities, one could compute TR at Q=4 accordingly. Without the explicit table data in this prompt, we assume typical values or an example to demonstrate calculation. For instance, if TR at Q=4 is listed as $15.00, then the corresponding answer is option (b). Similarly, if other data points suggest different values, the correct choice would depend on the actual figures.

Understanding how to compute total revenue is fundamental in analyzing firm behavior. Firms aim to maximize profit, which involves comparing marginal revenue to marginal cost and using total revenue calculations as part of this analysis. Recognizing the structure of the MR curve in different market types—perfectly competitive markets versus monopolistic or imperfectly competitive markets—is vital for economic analysis.

In conclusion, these questions highlight key economic concepts: the nature of the marginal revenue curve in different market structures and the computation of total revenue. Clarity in understanding the characteristics of MR and how it influences firm decisions allows for better insights into market dynamics and firm strategy. Accurate interpretation of data and graphical analysis are essential skills for microeconomics students and practitioners alike.

References

• Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach. W.W. Norton & Company.
• Krugman, P., & Wells, R. (2018). Microeconomics. Worth Publishers.]
• Nicholson, W., & Snyder, C. (2017). Microeconomic Theory: Basic Principles and Extensions. Cengage Learning.]
• Frank, R., & Bernanke, B. (2019). Principles of Economics. McGraw-Hill Education.]
• Salvatore, D. (2019). Microeconomics: Theory and Applications. Oxford University Press.]
• Depken II, C. A., & Woodbury, S. A. (2005). Price Elasticity of Demand: Implications for Competition Policy. Journal of Competition Law & Economics.]
• Stiglitz, J. E. (2010). Economics of the Public Sector. W.W. Norton & Company.]