CMA Foundation · Fundamentals of Business Mathematics and Statistics · Calculus - Application in Business
A company in Surat faces the demand function p = 100 − 0.5x, where p is price in rupees and x is units sold. What is the marginal revenue function?
Marginal revenue is 100 − x. Total revenue equals price times quantity, which is 100x − 0.5x², and differentiating this with respect to x gives 100 − x. The expression 100 − 0.5x is only the price or average revenue.
- A100 − 0.5x
- B100x − 0.25x²
- C100 − xCorrect
- D50 − x
Explanation
Revenue R = px = 100x − 0.5x². Differentiating gives MR = 100 − x. The option 100 − 0.5x is the price (average revenue), not marginal revenue, and 100x − 0.25x² is a wrongly integrated expression.
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