Posted: December 30th, 2021
# 8 : Hope maximum of a wwireThis problem gives you a preview of something you might see in a microeconomics class. Suppose there’s an appliance store that sells refrigerators. Itcould set its price high and sell very few refrigerators, or it could set its price low and sell many more refrigerators. The following table shows somepossible choices this store could make:PriceQuantityTotal Revenue (P x Q)(Dollars per refrigerator)(Refrigerators per year)(Dollars per year)400030020060,00020040080,00010060060,000800The graph below plots the firm’s total revenue curve: that is, the relationship between quantity and total revenue given by the two right columns inthe table above. The five choices are also labeled. Finally, two black lines are shown; these lines are tangent to the green curve at points B and D.100-( ( 400, 30 )Total Revenue( thousands of $) per year )80-B ( 200, 60 )(500, 80)(300 80 )D ( 600, 60)> Tangent linoh boy(700, 40)3020-B (0 , 800 )100 200 300 400 500 600 700300Ouantity ( refrigerators per year )Using the information on the slope of the lines tangent to the curve at points B and D, plot the slope of the total revenue curve on the graph below.(As it turns out, it’s a straight line, so the two points you plot will determine a line.)?O-REVENUE (Dollars per refrigerator)Slope of TR8 8 .-250100200 300 400 500 600QUANTITY (Refrigerators per year)700The total revenue curve reaches its maximum at a quantity ofrefrigerators per year. At this point, the slope of the total revenue curve is
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