The figures given below represent the revenue curves of a monopolist. Figure 10.2 TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
Refer to Figure 10.2.If the output at E is 600 units, then the output at B is _____ units.(We know that the slope of the marginal revenue curve is twice the slope of the average revenue curve. )

Question

The figures given below represent the revenue curves of a monopolist. Figure 10.2  TR: Total revenue curve
AR: Average revenue curve
MR: Marginal revenue curve
Refer to Figure 10.2.If the output at E is 600 units, then the output at B is _____ units.(We know that the slope of the marginal revenue curve is twice the slope of the average revenue curve. )

Quizplus · Accepted Answer

From the graph, we can see that the marginal revenue curve intersects the x-axis at point B, which is the point where marginal revenue is zero. Therefore, the output at point B is where the monopolist maximizes their total revenue. We also know that the slope of the MR curve is twice the slope of the AR curve. So, at point E, the slope of the MR curve is half the slope of the AR curve. Since we know the output at point E (600 units), we can find the corresponding point on the AR curve by drawing a vertical line from point E to intersect the AR curve. From there, we can trace horizontally to the y-axis to find the corresponding price. Then, we can use the formula for AR (AR = TR/Q) to find the corresponding output (Q) at point B. Using this method, we can find that the output at point B is 300 units. Therefore, the answer is (C) 300 units.

The Figures Given Below Represent the Revenue Curves of a Monopolist