Answer to Question #120460 in Macroeconomics for AFRANE AKWASI

Question

With the aid of illustrations discuss the relationship between a firm’s total revenue curve and demand curve

Answer 1

When the demand curve is slanting from left to the right of the vertical and horizontal axes, then the marginal revenue curve will curve line EQm at point G. Marginal revenue curve will be to the left of the Demand Curve,this is because when marginal cost of commodities is high the quantity supplied will be low. This will result in the marginal revenue curve to be twice as sharp as the demand curve.

 Marginal revenue is the impact made by the revenue made from the additional charges of one unit sold at a given time. It shows how much profit was made for selling an additional unit of a good or service.