Chapter14Graphs - Ch. 14 Figures Figure 14.1 Supersonic...

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Ch. 14 Figures Figure 14.1 Supersonic Econ’s Demand, Total Revenue, and Marginal Revenue The table shows the quantity of Supersonic Econ’s planes demanded at every price with the corresponding total revenue and marginal revenue from their sale. Part (a) shows the downward sloping demand curve for Supersonic Econ’s planes and its marginal revenue curve. The marginal revenue curve lies below the demand curve because selling another plane increases total revenue by the price of the plane, yet decreases total revenue because the price must drop to sell that additional plane. Part (b) shows its total revenue when more airplanes are sold at a lower price. Marginal revenue is positive when total revenue is rising; marginal revenue is negative when total revenue is falling; and marginal revenue is equal to zero when total revenue is maximized. Quantity of Airplanes Price ($) Total Revenue ($) (TR) Marginal Revenue ($) (MR) 0 40.00 0.00 _ 1 37.78 2 35.56 71.12 33.34 3 33.33 99.99 28.87 4 31.11 124.44 24.45 5 28.89 144.45 20.01 6 26.67 160.02 15.57 7 24.44 171.08 11.06 8 22.22 177.76 6.68 9 20.00 180.00 2.24 10 17.78 177.80 -2.20 11 15.56 171.16 -6.64 12 13.33 159.96 -11.20 13 11.11 144.43 -15.53 14 8.89 124.46 -19.97 15 6.67 100.05 -24.41 16 4.44 71.04 -29.01 17 2.22 37.74 -33.30 18 0 -37.74 0 30 60 90 120 150 180 01234567891 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 Quantity of Airplanes $ -15 -10 -5 0 5 10 15 20 25 30 35 40 1234567891 0 1 11 2 1 31 4 1 51 6 1 71 8 Quantity of Airplanes $ / Airplane (b) total revenue for the firm total revenue decreasing when MR>0 D MR TR total revenue maximized when marginal revenue is equal to zero downward sloping demand curve
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This note was uploaded on 01/24/2012 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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Chapter14Graphs - Ch. 14 Figures Figure 14.1 Supersonic...

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