Question

Consider a perfectly competitive market described by the supply function P = 20 + 0.1Q and demand function P = 80 - 0.3Q. If the market is in equilibrium, then an individual firms total revenue (TR), average revenue (AR) and marginal revenue (MR) functions are: TR = 26Q, AR = 26, and MR = 26 TR = 30Q, AR = 30, and MR = 30 TR = 35Q, AR = 35, and MR = 35 TR = 80 - 0.3Q, AR = 80 - 0.6Q, and MR = 80 - 0.3Q TR = 80Q - 0.3Q2 , AR = 80 - 0.3Q, and MR = 80 - 0.6Q

Answer 1

Given the a perfectly competitive market described by the supply function P = 20 + 0.1Q and demand function P = 80 - 0.3Q.

If the market is in equilibrium, then the supply function is equal to the demand function.
i.e. 20 + 0.1Q = 80 - 0.3Q
0.1Q + 0.3Q = 80 - 20
0.4Q = 60
Q = 60 / 0.4 = 150
and
P = 20 + 0.1(150) = 20 + 15 = 35.

Therefore, given that Q products were produces and sold at $35.
Therefore, the total revenue is given by 35Q.

Average revenue is given by the total revenue divided by quantity = 35Q / Q = 35.

Therefore, TR = 35Q, AR = 35, and MR = 35