Question

The demand schedule for a firm is shown below

$\begin{array}{cc}Price\left(Rs\right)& Quantity\\ 7& 100\\ 6& 200\\ 5& 300\\ 4& 400\\ 3& 500\end{array}$

What is the revenue maximizing level of output?

• A. 200
• B. 300
• C. 400
• D. 500

Answer 1

The correct option is C

400

Let us add the total revenue column using the relation $TR=P\times Q$

$\begin{array}{ccc}Price\left(Rs\right)& Quantity& TR\\ 7& 100& 700\\ 6& 200& 1200\\ 5& 300& 1500\\ 4& 400& 1600\\ 3& 500& 1500\end{array}$

We can see that maximum revenue of Rs 1600 occurs at an output level of 400.