Answer to Question #107884 in Microeconomics for Sydney Kazembe

Question #107884
You are given that the equilibrium price and quantity of a product A are $30 and 2kg respectively. What is the marginal revenue when the price elasticity of demand is -3?
What is the marginal revenue when quantity is 4?
1
Expert's answer
2020-04-07T08:21:58-0400

Solution:


"MR=p\\times (1+ \\frac {1}{E_d})"

"MR=30(1-\\frac {1}{3})"


"MR=20"

"E_d=Q_d^{\/}\\times \\frac {p}{Q}"

"-3= Q_d^{\/}\\times \\frac {30}{2}"

"Q_d^{\/}=-0.2"

If q=4


"-3=-0.2 \\times \\frac{p}{4}"

"p=60"

"MR=60(1-\\frac {1}{3})"

"MR=40"


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