Question

Assuming the market equilibrium price for wheat is $5 per bushel, draw the total revenue and the marginal revenue curves for the typical wheat farmer in the same graph. Explain how marginal revenue and price are related to the total revenue curve.

Answer 1

Answer on Question #68489 – Economics - Microeconomics

Question

Assuming the market equilibrium price for wheat is $5 per bushel, draw the total revenue and the marginal revenue curves for the typical wheat farmer in the same graph. Explain how marginal revenue and price are related to the total revenue curve.

Answer

For the farmer the market price for wheat is determined by market. So, he is price taker and might sell all he wants at $5 per bushel. Since MR is positive and constant, The TR curve is increasing at a constant rate. In other words, slope of the TR curve equals MR or P – 5.

Answer provided by www.AssignmentExpert.com