Question

Calculate price, AR and TR from the following data:

Units of output	1	2	3	4
MR (₹)	20	16	9	3

Answer 1

Formulas Used:

• Total Revenue (TR) = Sum of all marginal revenues up to that unit.
• Average Revenue (AR) = TR ÷ Output
• Under imperfect competition, Price = AR

Output = 1

• MR = ₹ 20
• TR = ₹ 20
• AR = TR / 1 = ₹ 20
• Price = ₹ 20

Output = 2

• MR = ₹ 16
• TR = 20 (previous) + 16 = ₹ 36
• AR = TR / 2 = 36 ÷ 2 = ₹ 18
• Price = ₹ 18

Output = 3

• MR = ₹ 9
• TR = 36 + 9 = ₹ 45
• AR = TR / 3 = 45 ÷ 3 = ₹ 15
• Price = ₹ 15

Output = 4

• MR = ₹ 3
• TR = 45 + 3 = ₹ 48
• AR = TR / 4 = 48 ÷ 4 = ₹ 12
• Price = ₹ 12

Output	MR (₹)	TR (₹)	Price (₹)	AR (₹)
1	20	20	20	20
2	16	36	18	18
3	9	45	15	15
4	3	48	12	12