A firm's demand curve in period 1 is Q=25 - P. Fixed costs are 20 and marginal costs per unit are 5.

a.

Total revenue = 25Q - Q^2

Margin revenue = 25 - 2Q

b.

12.50

c.

12.50

Explanation:

a.

SUe the following equation for total revenue

Total revenue = PQ

Where

P = 25 - Q

Placing value sin the equation

Total revenue = (25-Q)Q = 25Q - Q^2

Margin revenue = Differentiation of total revenue = Demand curve - Quantity = ( 25 - Q) - Q = 25 - Q - Q = 25 - 2Q

b.

When marginal revenue will be zero, the equation will be

Marginal Revenue = 0

25 - 2Q = 0

2Q = 25 - 0

2Q = 25

Q = 25/2

Q = 12.5

c.

When marginal revenue will be zero the revenue will be maximized

Hence,

Price = P = 25 - Q = 25 - 12.5 = 12.5 (as per marginal revenue Q = 12.5)

answer; is usually (less than) the socially optimal level of consumption;