Answer the following questions based on the given table. Unit of goods sold Price in Rs. TR (Rs.) AR (Rs.) MR (Rs.) : : : : : : : : : : 1 35 2 30 3 25 4 20 a) Complete the given table. [3] b) Draw…

a) Completion of the Table

To complete the table, we use the following formulas:

• Total Revenue (TR) = Price $\times$ Quantity
• Average Revenue (AR) = $\frac{TR}{Q}$ (Note: In this case, AR is equal to Price)
• Marginal Revenue (MR) = $\frac{\Delta TR}{\Delta Q}$ (Change in TR / Change in Q)

Calculations:

1. Unit 1:

   • $TR=35\times 1=35$
   • $AR=\frac{35}{1}=35$
   • $MR=-$ (No previous unit)

2. Unit 2:

   • $TR=30\times 2=60$
   • $AR=\frac{60}{2}=30$
   • $MR=\frac{60-35}{2-1}=\frac{25}{1}=25$

3. Unit 3:

   • $TR=25\times 3=75$
   • $AR=\frac{75}{3}=25$
   • $MR=\frac{75-60}{3-2}=\frac{15}{1}=15$

4. Unit 4:

   • $TR=20\times 4=80$
   • $AR=\frac{80}{4}=20$
   • $MR=\frac{80-75}{4-3}=\frac{5}{1}=5$

Completed Table:

b) Drawing AR and MR Curves

The Average Revenue (AR) curve is derived from the Price column, and the Marginal Revenue (MR) curve is derived from the MR column. Both curves slope downwards from left to right, indicating that to sell more units, the firm must lower the price. The MR curve lies below the AR curve.

Key Observations:

• The AR curve passes through points (1, 35), (2, 30), (3, 25), and (4, 20).
• The MR curve passes through points (2, 25), (3, 15), and (4, 5).
• As quantity increases, both AR and MR decrease.