Monopoly single-price: marginal revenue & elasticity

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Intros
Lessons
  1. Monopoly Single-Price: Marginal Revenue & Elasticity Overview:
  2. Total Revenue & Demand Curve
    • Total Revenue: p × q
    • Deriving Total Revenue from Demand
    • Total Revenue curve
    • Quadratic function
  3. Marginal Revenue & Demand Curve
    • Finding Marginal Revenue from Total Revenue
    • Formula to Calculate Marginal Revenue
    • Graphing Marginal Revenue
  4. Elasticity & Marginal Revenue
    • Elastic Demand \, \, MR > 0
    • Inelastic Demand \, \, MR < 0
    • Unit Elastic Demand \, \, MR = 0
    • In a Monopoly, Demand is always Elastic
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Examples
Lessons
  1. Use the following table to:

    Price (p)

    Quantity (q)

    6

    0

    5

    3

    4

    6

    3

    9

    2

    12

    1

    15

    0

    18

    1. Create a table of values for the total revenue curve
    2. Graph the total revenue curve.
  2. Use the following table to:

    Price (p)

    Quantity (q)

    6

    0

    5

    4

    4

    8

    3

    12

    2

    16

    1

    20

    0

    24

    1. Create a table of values for the total revenue curve
    2. Graph the total revenue curve.
  3. Finding the Marginal Revenue & Demand Curve
    Use the table of values of the total revenue curve to:

    Price (p)

    Total Revenue (R)

    0

    0

    5

    25

    10

    40

    15

    45

    20

    40

    25

    25

    30

    0

    1. Calculate the marginal revenue
    2. Graph the marginal revenue curve
  4. Suppose the demand curve is p = 6 - 2q
    1. Graph the demand curve
    2. Determine function of the marginal revenue curve.
    3. Graph the marginal revenue curve.
  5. Suppose the demand curve is p = 10 - 5q
    1. Graph the demand curve
    2. Determine function of the marginal revenue curve.
    3. Graph the marginal revenue curve.
  6. Learning the Relationship Between Elasticity & Marginal Revenue
    Fill in the blanks
    1. Elasticity \, \, MR ______ 0 \, \, price cut \, \, R_______.
    2. Inelasticity \, \, MR ______ 0 \, \, price cut \, \, R_______.
    3. Unit Elasticity \, \, MR ______ 0 \, \, price cut \, \, R_______.
  7. If a company is producing a good where the demand is elastic, then the owner should
    1. Decrease the price of the good.
    2. Keep the price the same.
    3. Increase the price of the good.
    4. Not enough information to determine what to do.
  8. If a company is producing a good where the demand is inelastic, then the owner should
    1. Decrease the price of the good.
    2. Keep the price the same.
    3. Increase the price of the good.
    4. Not enough information to determine what to do.