CA Foundation Exam > CA Foundation Questions > Assume that when price is 20, the quantity de...
Start Learning for Free
Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.?
Most Upvoted Answer
Assume that when price is 20, the quantity demanded is 15 units and wh...
Calculating Marginal Revenue
To calculate marginal revenue, we need to know the change in total revenue resulting from a one-unit change in quantity. In other words, it is the additional revenue generated by selling one more unit of the product.
Using the Given Information
In this case, we are given that the quantity demanded increases from 15 units to 16 units when the price decreases from 20 to 18. This means that the price elasticity of demand is less than 1, indicating that the demand is relatively inelastic.
Calculating Marginal Revenue
To calculate marginal revenue with this information, we can use the following formula:
Marginal Revenue = (Change in Total Revenue) / (Change in Quantity)
We know that the change in quantity is 1 unit (from 15 to 16), and we can calculate the change in total revenue using the following formula:
Change in Total Revenue = (New Quantity x New Price) - (Old Quantity x Old Price)
Plugging in the values we have, we get:
Change in Total Revenue = (16 x 18) - (15 x 20) = 288 - 300 = -12
This means that the total revenue decreased by $12 when the quantity increased from 15 to 16 units. Therefore, the marginal revenue is:
Marginal Revenue = (-12) / 1 = -$12
Interpreting the Result
A negative marginal revenue indicates that the total revenue decreases as the quantity increases. This is because the demand is relatively inelastic, meaning that the decrease in price did not lead to a significant increase in quantity demanded. As a result, the decrease in price resulted in a decrease in total revenue.
To calculate marginal revenue, we need to know the change in total revenue resulting from a one-unit change in quantity. In other words, it is the additional revenue generated by selling one more unit of the product.
Using the Given Information
In this case, we are given that the quantity demanded increases from 15 units to 16 units when the price decreases from 20 to 18. This means that the price elasticity of demand is less than 1, indicating that the demand is relatively inelastic.
Calculating Marginal Revenue
To calculate marginal revenue with this information, we can use the following formula:
Marginal Revenue = (Change in Total Revenue) / (Change in Quantity)
We know that the change in quantity is 1 unit (from 15 to 16), and we can calculate the change in total revenue using the following formula:
Change in Total Revenue = (New Quantity x New Price) - (Old Quantity x Old Price)
Plugging in the values we have, we get:
Change in Total Revenue = (16 x 18) - (15 x 20) = 288 - 300 = -12
This means that the total revenue decreased by $12 when the quantity increased from 15 to 16 units. Therefore, the marginal revenue is:
Marginal Revenue = (-12) / 1 = -$12
Interpreting the Result
A negative marginal revenue indicates that the total revenue decreases as the quantity increases. This is because the demand is relatively inelastic, meaning that the decrease in price did not lead to a significant increase in quantity demanded. As a result, the decrease in price resulted in a decrease in total revenue.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.?
Question Description
Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.?.
Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.?.
Solutions for Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? defined & explained in the simplest way possible. Besides giving the explanation of
Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.?, a detailed solution for Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? has been provided alongside types of Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? theory, EduRev gives you an
ample number of questions to practice Assume that when price is 20, the quantity demanded is 15 units and when price 2 is 18, the quantity demanded is 16 units. Based on this information, what is the marginal revenue resulting from an increase in output from 15 units to 16 units.? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup