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Use the demand schedule that follows to answer questions 1, 2, and 3.
1. Calculate total revenue and marginal revenue at each quantity.
2. Use Chapter 4's total-revenue test for price elasticity to determine at which price levels the demand is elastic and inelastic.
3. Suppose the marginal cost of successive units of output were $3.50. What output would the profit-seeking firm produce and what price would the firm charge?
Price
Quantity Demanded
Total Revenue
Marginal Revenue
Elasticity
$8.00
0
$7.50
1
$7.00
2
$6.50
3
$6.00
4
$5.50
5
$5.00
6
$4.50
7
$4.00
8
$3.50
9
$3.00
10
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