Compute the total revenue, marginal revenue and average revenue schedules in the following table. Market price of each unit of the good is Rs 10.
| Quantity Sold | TR | MR | AR |
|---|---|---|---|
| 0 | |||
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 |
| Quantity Sold | TR (Rs) | MR (Rs) | AR (Rs) |
|---|---|---|---|
| 0 | 0 | - | - |
| 1 | 10 | 10 | 10 |
| 2 | 20 | 10 | 10 |
| 3 | 30 | 10 | 10 |
| 4 | 40 | 10 | 10 |
| 5 | 50 | 10 | 10 |
| 6 | 60 | 10 | 10 |
Explanation
The solution is derived based on the definitions provided in the context. Total Revenue (TR) is calculated as the product of market price and quantity sold (). Since the market price is fixed at Rs 10, TR increases by Rs 10 for each additional unit sold. Marginal Revenue (MR) is defined as the increase in total revenue for a unit increase in output. In this case, because the price is constant, the increase in TR is always Rs 10 for every unit sold. Average Revenue (AR) is defined as total revenue per unit of output (). Algebraically, since , dividing by gives . Thus, AR remains constant at Rs 10. At quantity 0, MR and AR are undefined/not applicable as there is no output.
Solution Steps
Step 1: Compute Total Revenue (TR) for each quantity using the formula . Given Price () = Rs 10, TR is calculated as . For example, at , .
Step 2: Compute Marginal Revenue (MR). MR is the change in TR from selling an additional unit. For the first unit, . Since price is constant, MR remains Rs 10 for all subsequent units.
Step 3: Compute Average Revenue (AR) using the formula . For example, at , . Since the price is fixed, AR equals the price (Rs 10) for all units where .