Lecture 6

Question 1

Aim of advertising

Answer 1

Shift in the demnae curve and making demand curve less elastic

Demand shifts to the right then becomes less elastic

Question 2

Total revenue

Answer 2

Price x quantity

Question 3

Average revenue

Answer 3

Total revenue / quantity

Question 4

Marginal revenue

Answer 4

Change in total revenue / change in quantity

Change in AR and TR

Question 5

Revenue changes when the firms are price takers (horizontal demand curve)

Answer 5

Marginal and average revenue

Question 6

Profit maximised at the output where

Answer 6

MC = MR

Question 7

A price taker is a firm which has

Answer 7

No control over its price

Question 8

Revenue curves when price varies with output (downward sloping demand curve)

Answer 8

AR, TR, revenue curves and price elasticity of demand

Question 9

Using total curve

Answer 9

Maximising the difference between TR and TC, the total profit curve

Question 10

Using marginal and average curves

Answer 10

Stage 1: profit is maximised at the quantity where MR = MC

Stage 2: using AR and AC curves to measure the size of the profit (and the products price)