Answer to Question #192518 in Economics of Enterprise for Dagnachew

Question

A firm’s demand curve in period 1 is Q=25 - P. Fixed costs are 20 and marginal costs per unit are 5.

Answer 1

Total revenue is Price×Quantity, Rearraging the demand equation, we get

$P=25-Q$

So,

Total Revenue$=PQ=(25-Q)×Q=25Q-Q^2$

Marginal Revenue would be differentiation of Total revenue. So,

Marginal revenue$=25-2Q$