fig) rota Revenue, Marginal Revenue 8Nd Average » : re are three Concepts of revenue - e bee Total Revenue ~ TR. By totay i py multiplying the price per y . ne wane fr eB A the total revenue, p is the ie! ~ Average Revenue - AR. Avera, ies by dividing total revenue (| obtai Rae Hb i 2-O_, AR= qq I revenue, Se revenue is the raven R) with the quantity solg is I to price i.e. AR = Bares wie eee A= Oa sold changes by a very oa AR _ dR MR ¢.0 Aq dq Alternatively, MR is expressed as: R=pxq ‘ginal revenue is defined small amount, Mathemati on ici MR= Gq dq (<4) qi aa, dq Using product rule] MR=P- cig [Using Note 1: This (AR) Note2: For maximum AR, slope of ARi.e. d “dq Note 3/At max. point of AR, AR = MR. Revenue "WE Mean the to Init (p) with Quantity of tl Price ang q the quanti 175, "al Sale receipts of atirm. itis Se0d sold (q), Mathematically, lity sold, Ue Per unit of the Quantity sold. } Mathematically, 8 change in total everiue (Fi) ically, ession is a general result and is true for all demand functions. pr Expple \e demand for a certain product is represented by the equation cS} P= 100-5q se 7) Find the marginal revenue for any outpl of What is MR when q = 0 and q = inal rev tion, the marg| Solution : Given the demand func! "nding the total r — Sq? R= Rq = (100 - §q) q = 1009 - 5d dR_ dR ae = Go = ge (1009 - 54! MR = ao eeal - *. MR = 100 - 10q Beco (i) When q=0, MR = jposar hen q = 4, MR = 100 - i first venue function is found by ing it ivative, as follows : function and then taking its derivat evenue func!176 ve of a monopolist is given by Example/64. The demand cu! p= 100-x-x* (0) Find the marginal revenue for any level of output x (i) What is MR when (a) x=2, and (b) x=0- Solution: (i) Given p = 100 -x-* R=pr=(100—x— 22) x= 100-7 - 0 oR_d = MR = 5 = 5 (100% — *) R = 100 — 2x — 3° 2 (i) When x=2, MR = 100-2 x 2-3 (2) = 84 When x 0, MR = 100-2 x 0~-3(0)" = 100 Example 65. The demand curve of a monopolist is given by 100-« Plates () Find the marginal revenue for any output q (ii) What is MR when q=0 and q=16 + Glen p = 100-4 _ 25 _ 9 Solution: Given p= 100-4 . % _ 4 2 ae C1) aps R=pq= (25-4) o-2%-£ OR _ MR = — = | 259 — dq 4 | . MR=25-24_95_ 9 WR a2 Go Bi, (il) when q=0, MR = 25-0 =25 when 9 16, MR = 25 — 18 — 47 Exampl¢ 66. The revenue function of a monopolist is given by: R=14K-% Z Find AR and MR. ton: AR =f = 1a Solution: AR = 7 = 7 they7 67. The demand curve for a Monopolist i Z o0- ee 4 rid TR. AR and MR r at what value of x, MR is zero @ What is the price when MR = 0 ution: The demand curve is: x = 100 ~ 4p om p= 100-% p= (100—%) A) gt = Total Revenue = p-x=4(100 ~x)x=25"-% 4 AR = Average Revenue MR = Marginal Revenue ( When MR =0 > 25-5 =0 or x=! (i For MR = 0, x= 50 Putting the value of x in i) 1 (00 — 50) = ; (60) = Rs. 1250 Examp| The total revenue curve for the commodity js TR=1&+ 32 - ed Find (a) the slope of average revenue function, (b) the level of output at which this function 's maximum (c) varfy that AR=MR at the maximum point of AR cue. Solution: Given: ma 1x+th-38 TR 1 mz ip aes p= l2+oK a” a = 28 =124x-% d dias ee Spe ot an = 2. (any = % (12+ 3x- 3%)4-3" geno ie Siope of AR For Max. AR, Slope 1.2 = — 8 or x=_ 3 Thus, AR is highest at x=" 3 Now at the highest point of AR CUE X= when xa? M=1243x-5% -233(2)-a(9) = 12+3- 3- 2 vwiven x= 3, wp =124+%-% as ae 12+7 767 16 Thus, at the highest point of AR function, AR=MR.d Marginal Cost ful in studying the cost concepts. (3) Average Cost an units of a certain commodity and incurs 9 total Derivatives are use firm produces q ose that a | ‘taut cost function is given by: . c=t@) : 7, or C or TC, Notations usually used to denote cost are: 7 : ei (i) Average Cost: Average cost Is defined as the cost production’ per i a is given by _ ao=< q ai | ii) Marginal Cost: Marginal cost is defined on the change in total cost é (q) 8 anand by a very small amount. It is given by ) When ua _ U4 ac_ ac Pin nae Thus, is the first derivative of total (C) cost w.rt. output q Example 73. Given the total cost function: = 60 -12q+2q" Find (i) AC function and (ii) MC function. Solution: Given TC ( x.) = 60 — 12q + 2q? ; () AC =Z— 80-129 +29? 6 4 ] =q 12 +2q j dx qd i) Me = 2% _ ea dig (80 ~ 129 + 2g) MC = 12 + 4g Example 74. The total Cost C is given ag C= .005x* — .02% — 30x +. 3999 Wsat = - C22) F ~ 2 (6) + xan smo * i w= Z =F (oe? _ 000? ax x0) = (05) @P) - 002) (@y-30 fr1=3 C= (05) 27) — (22) 6) - 20 =015-012-5 ns ee 75. Find the marginal cost function for the average cost function e 104448 O Fox Sncing MC, we fest find TC which is given by- "aK.9= (ss0+4sB)ontsP+aore _~ -B-Sov+0+9 2 saa