mba500
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Title: mba500

Essay Details:

Subject: Business
Author: Thelma A
Date: September 10, 2013
Level: University
Grade: A
Length: 3 / 684

Essay text:

The marginal revenue curve (MR) lies below the demand curve because the “gain in revenue from an extra unit of output is less than the price charged for that unit of output” (McConnell and Brue, 2004, p.11). This makes Quasar a price maker, not a price taker. Consequently, the pricing strategy determined by Quasar will affect demand, revenues and profits. As Quasar’s price increases, demand increases, and total revenue and profit increase at a diminishing rate. Total revenue (TR) is maximized at 13.5($bn), when marginal revenue equals marginal cost; in this instance, at 5.3(mn units). For productive and allocative efficiency, the socially optimal price should be set at $1,250 and 9(mn units) produced, however this would result in a profit loss of 4...

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