Question

Question 1 (3.5 points) Quantity Price (dollars) $7.50 7.00 6.50 6.00 5.50 5.00 Total Revenue Marginal (dollars) Revenue $7.50 7.50 14.00 19.50 24.00 27.50 30.00 b. Draw the demand curve and label uue axes for quantities 3 and 4 and the related prices. Just like I showed you in class) (1 point) C. Calculate the price effect when quantity increases from 3 to 4 units. Be careful about the signs on these numbers (0.5 point) d. Calculate the quantity effect when quantity increases from 3 to 4 units. Again pay attention to the signs on these numbers. (0.5 point) e. Does the firm have a net gain or net loss, calculate this amount? What is the also equal to? (1 point)

Answer 1

I MR 17 Quanhly Porce (d) TR 7.50 7.50 12 14 J3 6.50 19.50 24 5.50 27.50 5 30 (14-7.50 -6.50 19.50-14) = 5.50 (24-19.50) = 4.50 (27.50-24) = 3.50 (30-27.5 = 2.5.. MR = change in TR - change in Quantity Prie A (6). em 1 2 3 4 5 6 7 8 TR = Pance x Quonnty JR = Pa change in Tutal Revenue = ATR ATR = Pogt gAP ATR = outhout effect & price effect.

DELIA PONO o Porce (1 Quanhly (2) Price effect - I AP free effect = (4) (6-6.50) Price effect = (4) (-0.50) force effect = -2 & guanhty effect - P og guanhdy effect = 6.5(4-3) Iguanhly effect = 65(1). Iguanddy effect = 65 © AIR = quantity effect (pol) + Price effect (I op) STR = 6.5 + (-2) OTR = 4.5 firm have a not gain of 4.5. It is also equal to NR at 4 units of guantity.