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Read the following data and answer questions 140-143.
A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.
Q.
What will be the Marginal Revenue in Market A?
- a)10
- b)20
- c)15
- d)25
Correct answer is option 'C'. Can you explain this answer?
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Read the following data and answer questions 140-143.A monopolist char...
Calculation of Marginal Revenue (MR) in Market A
1. Definition of Marginal Revenue: Marginal Revenue is the additional revenue generated from the sale of one additional unit of a product.
2. Formula for Marginal Revenue: MR = Change in Total Revenue / Change in Quantity Sold
3. Calculation of Change in Total Revenue: Since the monopolist charges a fixed price of Rs. 30 for his product, the change in total revenue will be equal to the price of the product, i.e., Rs. 30.
4. Calculation of Change in Quantity Sold: Elasticity of demand is used to calculate the change in quantity sold. The formula for elasticity is: % Change in Quantity Demanded / % Change in Price.
5. Calculation of Elasticity in Market A: Elasticity in Market A is given as 2. This means that if the monopolist increases the price of his product by 1%, the quantity demanded will decrease by 2%.
6. Calculation of % Change in Price: Since the monopolist charges a fixed price of Rs. 30, there is no change in price.
7. Calculation of % Change in Quantity Demanded: Using the formula for elasticity, the % change in quantity demanded can be calculated as: 2 = % Change in Quantity Demanded / 1. Therefore, the % Change in Quantity Demanded = 2.
8. Calculation of Change in Quantity Sold: Change in Quantity Sold = % Change in Quantity Demanded * Initial Quantity Sold. Since the monopolist's initial quantity sold is not given, let us assume it to be 100. Therefore, the Change in Quantity Sold = 2 * 100 = 200.
9. Calculation of Marginal Revenue in Market A: MR = Change in Total Revenue / Change in Quantity Sold = 30 / 200 = Rs. 0.15 or 15 paise.
Answer: Option C (15)
1. Definition of Marginal Revenue: Marginal Revenue is the additional revenue generated from the sale of one additional unit of a product.
2. Formula for Marginal Revenue: MR = Change in Total Revenue / Change in Quantity Sold
3. Calculation of Change in Total Revenue: Since the monopolist charges a fixed price of Rs. 30 for his product, the change in total revenue will be equal to the price of the product, i.e., Rs. 30.
4. Calculation of Change in Quantity Sold: Elasticity of demand is used to calculate the change in quantity sold. The formula for elasticity is: % Change in Quantity Demanded / % Change in Price.
5. Calculation of Elasticity in Market A: Elasticity in Market A is given as 2. This means that if the monopolist increases the price of his product by 1%, the quantity demanded will decrease by 2%.
6. Calculation of % Change in Price: Since the monopolist charges a fixed price of Rs. 30, there is no change in price.
7. Calculation of % Change in Quantity Demanded: Using the formula for elasticity, the % change in quantity demanded can be calculated as: 2 = % Change in Quantity Demanded / 1. Therefore, the % Change in Quantity Demanded = 2.
8. Calculation of Change in Quantity Sold: Change in Quantity Sold = % Change in Quantity Demanded * Initial Quantity Sold. Since the monopolist's initial quantity sold is not given, let us assume it to be 100. Therefore, the Change in Quantity Sold = 2 * 100 = 200.
9. Calculation of Marginal Revenue in Market A: MR = Change in Total Revenue / Change in Quantity Sold = 30 / 200 = Rs. 0.15 or 15 paise.
Answer: Option C (15)
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Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer?
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Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer?.
Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following data and answer questions 140-143.A monopolist charges Rs. 30 for his product. He notices that elasticity in market A is 2 and elasticity in market B is 5.Q.What will be the Marginal Revenue in Market A?a)10b)20c)15d)25Correct answer is option 'C'. Can you explain this answer?.
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