Question 1

If an individual consumer purchases more of a good when his or her income increases, that good is said to be a normal good.

Accepted Answer

This is the definition of a normal good.

Question 2

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, marginal revenue will be zero where Q = 6700.

Accepted Answer

To find the point where marginal revenue (MR) is zero, we need to take the derivative of the demand function with respect to quantity (Q) and set it equal to zero. Solving for Q gives us the quantity where MR is zero. Taking the derivative: d(Q_X)/dQ = -250 + 120P_Y Setting equal to zero and plugging in the given values: -250 + 120(50) = 0 Solving for Q: 5000 - 250Q + 120(50) + 0.04(60000) = 6700P 5000 - 250Q + 6000 + 2400 = 6700P P = (11000 - 250Q)/6700 MR = 6700(1 - Q_X/5000 - 1.2P_Y/5000 - 0.04I/5000) Setting MR equal to zero and plugging in Q = 6700: 0 = 6700(1 - 6700/5000 - 1.2(50)/5000 - 0.04(60000)/5000) Simplifying, we get MR = $0 exactly where Q = 6700. Therefore, the statement is true.

Question 3

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, marginal revenue will be zero where Q = 13,400.

Accepted Answer

Marginal revenue is the additional revenue that a firm receives from selling one more unit of a good or service. It is calculated as the change in total revenue divided by the change in quantity sold. The demand function provided does not directly give information about marginal revenue, as it describes the relationship between quantity demanded and the price of the good, the price of another good, and income. To find where marginal revenue is zero, one would typically need to derive the total revenue function from the demand function, then find its derivative (marginal revenue) and set it equal to zero. The statement provided does not perform these steps, nor does it directly relate to how marginal revenue is calculated or determined.

Question 4

Any demand function variable that will cause a demand curve to shift is usually called normal good.

Accepted Answer

A shift in the demand curve can be caused by various factors such as changes in consumer preferences, income (for inferior goods), prices of substitute goods, and prices of complementary goods. Therefore, any demand function variable that causes a shift in the demand curve does not necessarily have to be a normal good.

Question 5

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, the marginal revenue equation is: MR = 53.6-.008Q_X

Accepted Answer

The marginal revenue equation can be found by taking the derivative of the demand function with respect to quantity, and then solving for price. This gives MR = 53.6 - 0.008Q_X. Therefore, the statement is true.

Question 6

Technically, arc marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Accepted Answer

Arc marginal revenue is the value of the derivative of the total revenue function with respect to quantity divided by the quantity, dTR/dQ / Q, at that point.

Question 7

Given the demand function of Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, the maximum total revenue that can be attained is $179,560.

Accepted Answer

The maximum total revenue is $179,560 when P_X = $100.

Question 8

Since the average revenue curve gives the relationship between price and quantity demanded for a firm,. The average revenue curve is also the firm's demand curve.

Accepted Answer

The average revenue curve and the demand curve are the same for a firm in perfect competition because the firm is a price taker, which means it has to sell its product at the market price. The market demand curve is also the firm's demand curve in perfect competition. However, in imperfect competition, the demand curve may differ from the average revenue curve because the firm may have some control over the price of its product.

Question 9

Arc marginal revenue measures the average rate of change of total revenue with respect to quantity sold over some range of output.

Accepted Answer

This is the definition of arc marginal revenue.

Question 10

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 and Q = 4275.

Accepted Answer

The given statement correctly describes the maximum total revenue that can be attained for the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A when P_Y = $40.00, I = $2500, and A = $5,000.

Question 11

Technically, marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Accepted Answer

This is the definition of marginal revenue.

Question 12

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 8550.

Accepted Answer

Marginal revenue can be found by taking the derivative of the demand function with respect to quantity (Q). However, the given demand function includes variables other than Q, such as price (P), income (I), and advertising (A), which will affect the results of the derivative. Without information about the values of P, I, and A at the point where marginal revenue is zero, it is not possible to determine whether Q = 8550.

Question 13

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 for a total of $182.756.25.

Accepted Answer

The given information states that the maximum total revenue is $182,756.25 when P = 42.75.

Question 14

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 - .02Q_X.

Accepted Answer

The marginal revenue equation is MR = 85.50 - .02Q_X, which is consistent with the given demand function.

Question 15

Determinants of demand for a given good or service are demand function variables other then its own price.

Accepted Answer

Determinants of demand include factors such as consumer income, tastes and preferences, prices of related goods, consumer demographics, and changes in market trends.

Question 16

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 - .01Q_X²_.

Accepted Answer

The given demand function is Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A, and the values for P_Y, I, and A are provided. However, the marginal revenue (MR) equation is derived from the inverse demand function, not directly from the demand function itself. The MR equation provided does not directly follow from the given demand function without additional steps involving differentiation and inversion, which are not shown.

Question 17

Marginal revenue at a specific quantity is the slope of the total revenue curve at that quantity demanded.

Accepted Answer

Marginal revenue is the change in total revenue resulting from a one-unit change in quantity demanded. Therefore, the slope of the total revenue curve at a specific quantity is equal to the marginal revenue at that quantity.

Question 18

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, the maximum total revenue that can be attained is $118,240.

Accepted Answer

The demand function is not enough information to determine the maximum total revenue that can be attained. It depends on the price that is set.

Question 19

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 4275.

Accepted Answer

The marginal revenue curve is the derivative of the total revenue curve. The total revenue curve is equal to the price times the quantity. The price is equal to 1500 - 100Q + 75P_Y + 1.5I + .06A. Substituting in the given values, we get:TR = (1500 - 100Q + 75(40) + 1.5(2500) + .06(5000))QTR = (1500 - 100Q + 3000 + 3750 + 300)QTR = (8250 - 100Q)QThe marginal revenue curve is the derivative of the total revenue curve:MR = dTR/dQ = 8250 - 200QSetting MR equal to zero, we get:8250 - 200Q = 0200Q = 8250Q = 41.25Therefore, marginal revenue will be zero where Q = 41.25.

Question 20

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y= $50.00 and I = $60,000, the marginal revenue equation is: MR = 53.6-.004Q_X²

Accepted Answer

The marginal revenue equation is derived from the demand function, but the given equation does not correctly represent the marginal revenue derived from the provided demand function. Marginal revenue would involve the derivative of the revenue function, which is not directly provided by the demand function's coefficients in the manner shown.

Quiz 2: Revenue of the Firm

If an individual consumer purchases more of a good when his or her income increases, that good is said to be a normal good.

Given the demand function QX = 5,000 - 250PX +120PY +.04I where PY = $50.00 and I = $60,000, marginal revenue will be zero where Q = 6700.

Given the demand function QX = 5,000 - 250PX +120PY +.04I where PY = $50.00 and I = $60,000, marginal revenue will be zero where Q = 13,400.

Any demand function variable that will cause a demand curve to shift is usually called normal good.

Given the demand function QX = 5,000 - 250PX +120PY +.04I where PY = $50.00 and I = $60,000, the marginal revenue equation is: MR = 53.6-.008QX

Technically, arc marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Given the demand function of QX = 5,000 - 250PX +120PY +.04I where PY = $50.00 and I = $60,000, the maximum total revenue that can be attained is $179,560.

Since the average revenue curve gives the relationship between price and quantity demanded for a firm,. The average revenue curve is also the firm's demand curve.

Arc marginal revenue measures the average rate of change of total revenue with respect to quantity sold over some range of output.

Given the demand function QX = 1500 - 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 and Q = 4275.

Technically, marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Given the demand function QX = 1500 - 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 8550.

Given the demand function QX = 1500 - 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 for a total of $182.756.25.

Given the demand function QX = 1500 - 100PX + 75PY + 1.5I + .06A where PY = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 - .02QX.