Question

If the demand (price) function is P(Q) = 100 − 4Q, find expressions for revenue function, R(Q) and marginal revenue function, MR(Q). Hence estimate the MR for 10 units of sales.

Answer 1

R (Q) = 100Q - 4Q^2 , MR = 100 - 8Q , MR at Q (10) = 20

Explanation:

Demand curve ie Price as a function of Quantity ; P (Q) = 100 - 4Q

R, total revenue from sale = Q . P (Q)

R (Q) = (100 - 4Q) Q

• R (Q) = 100Q - 4Q^2

MR is addition to total revenue due to per unit change in sale, = d R / d Q

d ( 100Q - 4Q^2 ) / d Q

• MR = 100 - 8Q

MR at quantity , 10 unit of sales = 100 - 8 (10)

MR at Q (10) = 20