Answer to Question #177759 in Macroeconomics for Tanefa

Question

. Total revenue from the sale of X is given by the equation R=60Q-Q². Calculate the value of marginal revenue when the point price elasticity of demand when marginal revenue is -2.

Answer 1

If total revenue $R = 60Q - Q^2,$ then marginal revenue function is $MR = R'(Q) = 60 - 2Q.$

The demand function is:

P = R/Q = 60 - Q.

Ed = -1×P/Q = -2,

P/Q = 2,

P = 2Q,

60 - Q = 2Q,

Q = 20 units,

MR = 60 - 2×20 = 20.