Answer the following questions based on the given table. Unit of goods Price/AR (Rs.) TR (Rs.) MR (Rs.) : : : : 1 12 2 11 3 10 4 9 5 8 6 7 7 6 8 5 i) Complete the above table. [4] ii) Draw total,…

i) Completion of the table

The average revenue (AR) is the price received per unit.
Total revenue (TR) = AR × Quantity (Q).
Marginal revenue (MR) = ΔTR / ΔQ (change in total revenue when output is increased by one unit).

Explanation of calculations

1. Total Revenue
   $$T{R}_i=A{R}_i\times Q_i$$
   Example for $Q=3$: $TR=10\times 3=30$ Rs.

2. Marginal Revenue
   $$M{R}_i=\frac{T{R}_i-T{R}_{i-1}}{Q_i-Q_{i-1}}$$
   Example for the change from $Q=4$ to $Q=5$:
   $$MR=\frac{40-36}{5-4}=4\text{ Rs.}$$

The MR for the first unit is taken as the increase in TR from zero output to one unit, i.e. 12 Rs.

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ii) Total, Average and Marginal Revenue curves

The three revenue concepts are plotted against output (Q).

Interpretation of the graph

• TR curve rises steeply at low output, reaches a maximum at $Q=6$ (42 Rs.), and then falls, showing the classic “down‑ward‑sloping” total‑revenue pattern for a price‑setter.
• AR curve coincides with the demand curve faced by the firm; it is a straight line falling from 12 Rs. at $Q=1$ to 5 Rs. at $Q=8$.
• MR curve lies below the AR curve and falls twice as fast, crossing the horizontal axis at $Q=7$. The negative MR at $Q=8$ indicates that producing the eighth unit reduces total revenue.

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iii) Identification of market structure

Conclusion: The firm operates in a monopoly market structure. In a monopoly, the firm faces the market demand curve (AR), and because it must lower price to sell additional units, MR declines faster than AR, exactly as shown in the completed table and the revenue curves.