Question

Use the demand schedule below to calculate total revenue and marginal revenue at each quantity. Explain why the marginal revenue of the fourth unit of output is $3.50, even though its price is $5.

Price (P)	Quantity Demanded (Q)	Price (P)	Quantity Demanded (Q)
$7.00	0	$4.50	5
6.50	1	4.00	6
6.00	2	3.50	7
5.50	3	3.00	8
5.00	4	2.50	9

Answer 1

Price (P)	Quantity Demanded (Q)	TR	MR
7	0	0
6.5	1	6.5	6.5
6	2	12	5.5
5.5	3	16.5	4.5
5	4	20	3.5
4.5	5	22.5	2.5
4	6	24	1.5
3.5	7	24.5	0.5
3	8	24	-0.5
2.5	9	22.5	-1.5

TR=P*Q

MR of n th unit=(TR of n units -TR of p units)/(n-p)...................n>p

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The demand price is changing so quantity is changing means the demand curve is downward sloping and if the demand curve is downward sloping then the price and MR is different because of the MR curve slopes double than demand curve so the P>MR after first point on the graph.