Answer to Question #106424 in Macroeconomics for George Mwila Chola

Question

You are given that the equilibrium price and quantity of a product A are $30 and 2Kg respectively. 1)What is the marginal revenue when the price elasticity of demand is -3?
2)What is the Marginal Revenue when the quantity is 4?

Answer 1

The marginal revenue, Mr = P/Qs

1) Qs=2 ×−3 = -6

Mr=30/-6= -5

2) In a competitive market, the average and marginal revenue of a company are equal to each other and equal to price, i.e.

MR = P = 30.