Question

Use the following data to answer the questions below.

P	Q
$13.75	125
$13.20	129
$12.10	137
$11.55	145
$11.41	149

1.Use your first demand function to determine an equation for TR and MR as functions of Q. What is total revenue when P=$13.75 and whenP=$11.83?

Select one:

a. AtP=$13.75, TR=$1,699; at P=$11.83, TR=$1,689.

b. AtP=$13.75, TR=$1.189; at P=$11.83, TR=−$2.337.

c. At P=$13.75, TR=$1,435; at P=$11.83, TR=$1,388.

d. At P=$13.75, TR=$7,543; at P=$11.83, TR=$8,014.

2.What is the total-revenue maximizing price and quantity, and how much revenue is earned there?

Select one:

a. P∗=$13.00,Q∗=131, TR∗=$1,703

b. P∗=$11.87, Q∗=141, TR∗=$1,983

c. P∗=$12.15, Q∗=134, TR∗=$1,576

d. P∗=$13.49, Q∗=127, TR∗=$1,700

Answer 1

1. Option a

Using trendline in excel we can get the equation for Price and demand as Q=-9.701P+257.3

Q= -9.701P + 257.3
TR = P*Q =P*( -9.701P + 257.3) = -9.701P^2 + 257.3P
MR = -19.402P+257.3

TR = -9.701*13.75^2 + 257.3*13.75 = 1703

TR = -9.701*11.83^2 + 257.3*11.83 = 1686

2. Option a

P	Q	TR
13	131.2	1705.4
11.87	142.1	1687.3
12.15	139.4	1694.1
13.49	126.4	1705.6