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Dear sir,
I need an explanation on two MCQ questions on BPP revision kit.
firstly, on the solution of question 70, there is finished output (kg) FP1 $4950 FP2$3800, I have no idea where the numbers came from.
and secondly, on question 72 , i do not understand how they got the marginal revenue equation of 220-0.001q, and also I am not quite sure why revenue is maximised when marginal revenue=0, although i know that when MR=MC, profit is maximised.
Looking forward to hearing from you.
Best regards.
First question:
For FP1 there is a further loss of 10%. So 5,500 – (10% x 5,500) = 4,950
For FP2 there is a further loss of 5%. So 4,000 – (5% x 4,000) = 3,800Section question:
You really need to watch my free lectures. The marginal revenue equation is given on the formula sheet (and a and b are the same as in the price demand equation, which you need to know how to arrive at).
For maximum revenue, the marginal revenue does equal zero – the extra revenue neither increases or falls, which means we are at the maximum.
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