Question

Study the following demand schedule and answer the following question.

$\begin{array}{cc}Price\left(Rs\right)& Quantity\\ 11& 0\\ 10& 100\\ 9& 200\\ 8& 300\\ 7& 400\\ 6& 500\\ 5& 600\\ 4& 700\end{array}$

At what price is the MR maximum?

• A. Rs 11
• B. Rs 10
• C. Rs 9
• D. Rs 8

Answer 1

The correct option is B

Rs 10

Let's add the TR and MR columns to the table where
$TR=P\times Q;\&MR=\frac{\Delta TR}{\Delta q}$

$\begin{array}{cccc}P\left(Rs\right)& Q& TR\left(Rs\right)& MR\left(Rs\right)\\ 11& 0& 0& -\\ 10& 100& 1000& 10\\ 9& 200& 1800& 8\\ 8& 300& 2400& 6\\ 7& 400& 2800& 4\\ 6& 500& 3000& 2\\ 5& 600& 3000& 0\\ 4& 700& 2800& -2\end{array}$

It can be seen that MR is maximum at a price of Rs 10. This is expected as MR decreases with increase in quantity or decrease in price.