Figure 5-3Refer toFigure 5-3. At a price of $70 per unit, sellers' total revenue equals

Question

Figure 5-3​Refer toFigure 5-3. At a price of $70 per unit, sellers' total revenue equals

BlackTom AI · Accepted Answer

To determine sellers' total revenue at a given price, we need the quantity supplied (or quantity demanded in a simple competitive market) at that price, then multiply price by quantity: TR = P × Q.
From the figure, the demand line appears to run from (Q = 0, P = 100) to (Q = 50, P = 0). This gives a linear relationship P = 100 − 2Q, since the slope is (0 − 100)/(50 − 0) = −2.
Plugging in the given price P = 70 into the equation, we solve for Q: 70 = 100 − 2Q → 2Q = 30 → Q = 15.
Now compute total revenue: TR = P × Q = 70 × 15 = 1,050.
Option analysis:
- Option a ($1,050) aligns with the calculation above, yielding the correct total revenue at price 70.
- If there were other options (not provided here), we would check them by recomputing Q from P = 100 − 2Q and then multiplying by P, ensuring consistency with the graph’s linear demand relationship.
- A common mistake would be misreading the intercepts or using an incorrect slope, which would lead to a different Q and thus an incorrect TR value.
- Another pitfall is forgetting to multiply price by quantity; some students might report only the revenue per unit or misinterpret the graph as supply instead of demand, which would be inappropriate for calculating total revenue from sellers.
Overall, the correct reasoning confirms sellers' total revenue at P = 70 is 1,050, matching the standard TR computation on a linear demand diagram.

Figure 5-3Refer toFigure 5-3. At a price of $70 per unit, sellers' total revenue equals

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