Marginal Revenue is equal to:

1

(a)

The change in price divided by the change in output.

(b)

The change in quantity divided by the change in price.

(c)

The change in P x Q due to a one unit change in output.

(d)

Price, but only if the firm is a price searcher.

Marginal revenue can be defined as the change in total revenue resulting from__________.

1

(a)

purchase of an additional unit of a commodity

(b)

sale of an additional unit of a commodity

(c)

sale of subsequent units of a product

(d)

None of these.

When price remains constant at all level of output, total revenue______.

1

(a)

increases at increasing rate

(b)

increases at diminishing rate

(c)

increases at constant rate

(d)

None of these.

How does TR change with output when MR is negative?

1

(a)

TR falls with the increase in output

(b)

TR rise with the increase in output

(c)

TR falls with the decrease in output

(d)

None of these.

Average revenue curve is also known as:

1

(a)

Profit Curve

(b)

Demand Curve

(c)

Average Cost Curve

(d)

Indifference Curve

When total revenue is constant, average revenue will also be constant.

1

(a) True

(b) False

When marginal revenue falls to zero, average revenue becomes maximum.

1

(a) True

(b) False

Can Average revenue be zero.

1

(a) True

(b) False

Can Average revenue be negative.

1

(a) True

(b) False

Can Marginal revenue be zero.

1

(a) False

(b) True

How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?

2

(a)

Total Revenue = Market Price x Quantity sold

Give the meaning of revenue.

2

(a)

Revenue of a firm refers to receipts from the sale of output in a given period.

When TR falls, what happens to MR?

2

(a)

MR is negative.

What is the behaviour of average revenue in a market in which a firm can sell more only by lowering the price?

2

(a)

Average revenue will fall.

What is the behaviour of Marginal Revenue in a market in which a firm can sell any quantity of the output it produces at a given price?

2

(a)

Marginal revenue remains constant.

When is price (AR) different from MR?

6

(a)

Price (AR) is different from MR when more units of a commodity can be sold by reducing the price as in monopoly and monopolistic competition.

Complete the following table.

Price(Rs)	12	10	8	6
Output (units)	1	2	3	4
TR(Rs)	-	-	-	-
MR(Rs)	-	-	-	-

6

(a)

Complete the following table.

Output (units)	1	2	3	4
Price (Rs)	-	9	-	-
TR(Rs)	-	-	24	-
MR(Rs)	10	-	-	4

6

(a)

What is the relationship between TR and Price line when price is constant?

6

(a)

From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:

Quantity	1	2	3	4	5	6	7	8	9
Marginal Revenue	10	6	2	2	2	0	0	0	-5

6

(a)