Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
    1. Short-run - numerical
    2. Short-run - short-answer
    3. Long-run - short answer
    4. Cost theory - numerical
    5. Cost theory - short-answer
    6. Costs and cost curves - self-test questions
    7. Revenues - numerical
    8. Profit maximisation - short answer
    9. Revenue and profit - self-test questions
    10. Perfect competition - numerical
    11. Perfect competition - short answer
    12. Perfect competition - self-test questions
    13. Monopoly and oligopoly - short answer
    14. Monopoly - short answer
    15. The model of monopoly - self-test questions
    16. Economic efficiency - short answer
    17. Oligopoly - short answer
    18. Price discrimination - short answer
    19. Theory of firm - essay
    20. The big giveaway
    21. Fixing it transparently
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

Revenues - numerical

Question 1

The following table of data represents a business in operation.

Determine:

(i) Average revenue
(ii) Marginal revenue
(iii) Profit
(iv) Marginal cost
(v) Average cost

Plot all the data on one graph and determine the profit maximising output. Confirm that at this output, MC = MR.

Question 2

A firm is selling 5 units of its product, and has the following cost and revenue figures.

(a) Determine:

(i) the firm's average revenue and price
(ii) the firm's profit level.

b) Is the firm operating below or above its profit maximising output?

c) Determine the new total revenue and profit at the new level of output and sales.

Question 3

The following table shows the sales and revenue data for a firm selling its product.

Determine the firms TR, MR and AR over this range of output. Plot the firm's Revenue curves and show where the firm maximises its sales revenue.

Question 4

Distinguish between normal and supernormal profits.

Question 5

Who decides what level of profit is normal?

Question 6

Explain the difference between profit and money.

Question 7

What is a windfall profit?

Question 8

What is the difference between the average revenue of a product and its price?

Question 9

Why do businesses aim to make a profit?

Interactive questions

The following table of data represents a business in operation and is used for the following series of multiple-choice questions

1

Average revenue What is the average revenue for the firm at an output of 6 units? a) $34.10 b) $30 c) $150 d) $25 Please select an answerNo. This is the average cost.No, this is nothing to do with 6 units.No. This is the total revenue, not the average.Yes, spot on. Answer is: Average revenue = price, so this is a simple one to start with. TR = 150 Sales = 6 AR = 150/6 = $25

2

Marginal revenue What is the marginal revenue obtained from selling the 4th unit? a) $60 b) $35 c) $20 d) $140 Please select an answerNo. This is the price for 3 units.No. This is the price for 4 units.Yes, spot on. Answer: Definition - marginal revenue - the extra revenue from selling one more. Look at the calculations and the graph. You will see that the answer is $20.No. This is the TR when 4 are sold.

3

Profit maximising output The firms profit maximising output is: a) 35 b) 3 c) 4 d) 6 Please select an answerNo. That is the maximum profit.No. One unit too few.Yes, spot on. Answer: equation MC = MR or look at the graph. Profit is maximised when the third unit is sold.No. That is the revenue maximising output.

4

Marginal revenue What is the marginal revenue obtained from selling the 7th unit? a) 0 b) -$10 c) -$20 d) $50 Please select an answerNo. This is for the 6th.Yes, spot on. Answer: do the sums first and this type of question is easy. Guess, or try and do in your head, and you are in trouble, usually. Answer is a reduction of $10.No. This is for the 8th.No. This is the marginal cost of the 7th unit.

5

Revenue maximisation The firm will maximise its revenue if it sells: a) 4 units b) 5 units c) 6 units d) 7 units Yes, spot on. Answer: equation - revenue maximization when MR = zero. From the chart or the diagram - when it sells the 6th unit.No. Look again at the table, carefully.Your answer has been saved.