Question

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

| Quantity | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| Marginal Revenue | 10 | 6 | 2 | 2 | 2 | 0 | 0 | 0 | -5 |

Answer 1

| Quantity | MR | TR | AR | Ed = ΔQ/ΔP x P/Q |
| 1 | 10 | 10 | 10/1 = 10 | - |
| 2 | 6 | 10 + 6 = 16 | 16/2 = 8 | 1/2 x 10/1 = 5 |
| 3 | 2 | 16 + 2 = 18 | 18/3 = 6 | 1/2 x 8/2 = 2 |
| 4 | 2 | 18 + 2 = 20 | 20/4 = 5 | 1/1 x 6/3 = 2 |
| 5 | 2 | 20 + 2 = 22 | 22/5 = 4.4 | 1/0.5 x 5/4 = 2.5 |
| 6 | 0 | 22 + 0 = 22 | 22/6 = 3.6 | 1/0.9 x 4.5/5 = 1 |
| 7 | 0 | 22 + 0 = 22 | 22/7 = 3.1 | 1/0.5 x 3.6/6 = 1.2 |
| 8 | 0 | 22 + 0 = 22 | 22/8 = 2.7 | 1/0.4 x 3.1/7 = 1.1 |
| 9 | -5 | 22 + (-5) = 17 | 17/9 = 1.9 | 1/0.8 x 2.7/9 =0.38 |