The revenue table describes the marginal revenue earned by a

The revenue table describes the marginal revenue earned by a single-price monopolist. Use this information to answer the next two (2) questions. MR 14 6 -2 -10 4

Solution

From the above given table we can find the equation of the MR curve. Let us assume,

MR = a - bQ, Where a is the intercept term and b is the slope of the MR curve.

When MR = 22, Q = 1.

22 = a - b   ------------------------------------------(Equation - 1)

Again, when MR = 14, Q = 2,

14 = a - 2b --------------------------------------(Equation - 2)

Solving both the equations to find a and b,

14 = 22 + b - 2b

b = 8

So, a = 22 + 8 = 30.

The equation to the MR curve is MR = 30 - 8Q.

The market demand curve is half the slope of the MR curve.

So, the market demand curve can be written as,

P = 30 - 4Q

Q = 7.5 - (1/4)P

a) Q = 7.5 - (1/4)P