Question

Suppose a manufacturer sells a product as $2 per unit. If q units are sold, (a) write the total revenue function, (b) and find the marginal revenue function. What does the constant marginal revenue function mean?

Answer 1

Answer:

We are given that  a manufacturer sells a product as $2 per unit.

Quantity = q units

So, Total revenue = $\text{Cost per unit} \times quantity$

Total revenue = $2q$

So, the total revenue function is  $2q$

Marginal revenue is the derivative of the revenue functions

So, Marginal revenue = $\frac{dR}{dq} =2$

The marginal revenue function is 2

The constant marginal revenue function mean that the revenue earned by the addition of the output is constant.