In the graph, at what output is TR at its maximum, and what is the price there? A downward-sloping AR line from ₹20 (0 units) to 10 units (₹0), and an MR line from ₹20 down to 5 units (₹0), twice as steep. At 5 units MR is 0 and AR is ₹10 (point K).

In the graph, at what output is TR at its…

In the graph, at what output is TR at its maximum, and what is the price there?

Question 8

MediumOriginal question

In the graph, at what output is TR at its maximum, and what is the price there?

A downward-sloping AR line from ₹20 (0 units) to 10 units (₹0), and an MR line from ₹20 down to 5 units (₹0), twice as steep. At 5 units MR is 0 and AR is ₹10 (point K).

10 units, at a price of ₹0Correct answerYour answer5 units, at a price of ₹0Correct answerYour answer5 units, at a price of ₹10Correct answerYour answer1 unit, at a price of ₹20Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

TR rises while MR is positive and is highest where MR = 0, at 5 units.
The price is read from AR at 5 units: ₹10 (point K). TR = 10 × 5 = ₹50.

Worth noting

MR is 0 at 5 units, but the price is read from AR, not MR.

Concept: Maximum TR on a graph
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsTotal, average and marginal revenue

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

In the graph, at what output is TR at its maximum, and what is the price there?

Question 8

Explanation