Economics Demand Function Quiz

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Questions and Answers

What are the values of Q when total revenue (TR) is zero?

0 and 100
25 and 50
0 and 50 (correct)
0 and 25

What is the maximum value of total revenue (TR) and at which quantity (Q) does it occur?

1250 at Q = 25 (correct)
1250 at Q = 50
1000 at Q = 20
1500 at Q = 30

What is the equation for total revenue (TR) given the demand function?

TR = 200 - 2Q
TR = 100Q + 2Q^2
TR = 100 - 2Q
TR = 100Q - 2Q^2 (correct)

What is the x-coordinate of the vertex of the total revenue function?

<p>25 (A)</p> Signup and view all the answers

Which of the following accurately describes the graph of the total revenue function?

<p>A parabola that opens downward. (D)</p> Signup and view all the answers

Flashcards

TR = 0

The point where the total revenue (TR) is equal to zero, meaning the firm is generating no income.

Maximum TR

The maximum value that total revenue can reach, represented by the peak of the parabolic TR curve.

Total Revenue (TR) Function

A function that describes the relationship between the quantity of goods sold (Q) and the total revenue earned (TR) by a firm.

Vertex of TR Curve

The point on the TR curve where the slope is zero, indicating that the firm is selling the quantity that maximizes revenue.

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Q at TR = 0

The quantity of goods sold (Q) that leads to zero total revenue (TR).

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Study Notes

Demand Function and Total Revenue (TR)

Demand function: p = 100 – 2Q
Total Revenue (TR) is calculated as TR = p × Q

TR = 0

To find when TR = 0, substitute the demand function into the TR equation: 100 – 2Q = 0 Solving for Q: Q = 50

Maximum TR

To find the maximum value of TR, the quadratic equation for TR (100Q – 2Q²) needs to be in its vertex form.
TR = 100Q – 2Q²
The vertex of the equation occurs at an output (Q) of: Q = 25
Substitute Q = 25 into the TR equation to find the max value of TR: TR = 100(25) – 2(25)² TR = 2500 – 1250 TR = 1250

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Description

Test your understanding of the demand function and total revenue concepts. This quiz covers calculating total revenue, determining when it equals zero, and finding the maximum total revenue using a quadratic equation. Ideal for students studying microeconomics.