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Problem - Total Revenue, Average Revenue, Marginal Revenue

Question

You are given the following data about two firms:

FIRM A

Quantity

0

 

1

 

2

 

3

 

4

 

5

 

6

Total revenue ($)

0

 

10

 

20

 

30

 

40

 

50

 

60

Average revenue ($)

0

 

10

 

10

 

10

 

10

 

10

 

10

Marginal revenue ($)

 

10

 

10

 

10

 

10

 

10

 

10

 

Total cost ($)

30

 

42

 

50

 

60

 

76

 

100

 

140

Marginal cost ($)

 

12

 

8

 

10

 

16

 

24

 

40

 

Average cost ($)

 

42

 

25

 

20

 

19

 

20

 

23.3333333

FIRM B

Quantity

0

 

1

 

2

 

3

 

4

 

5

 

6

Total cost ($)

100

 

134

 

154

 

177

 

216

 

266

 

366

Average cost ($)

 

134

 

77

 

59

 

54

 

53.2

 

61

Marginal cost ($)

 

34

 

20

 

23

 

39

 

50

 

100

 

Price ($)

140

 

130

 

120

 

110

 

100

 

90

 

80

Marginal revenue ($)

 

130

 

110

 

90

 

70

 

50

 

30

 

Total revenue ($)

0

 

130

 

240

 

330

 

400

 

450

 

480

 

(a)         Complete the two tables above.

(b)         Are these firms operating in the short or the long run? (1 mark)      Firm A: short run / long run

                                                Firm B: short run / long run

(c)              Are these firms operating under perfect or imperfect competition?        Firm A:perfect / imperfect

                                Firm B:perfect / imperfect

(d)              What level of output will these firms produce in the short run?              

                   Firm A:               

                   Firm B:               

(e)         How would you describe their profit positions?

Firm A:    

Firm B:    

 

Summary:

The question is about two firms A and B which are operating in the same market and are rivals. Their costs and revenues are given. The level of output and profit margin has been determined.

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Comments

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