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If the marginal revenue of a firm is constant, then the demand function is ________ (a) MR (b) MC (c) C(x) (d) AC

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If the marginal revenue of a firm is constant, then the demand function is ________ 

(a) MR 

(b) MC 

(c) C(x) 

(d) AC

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1 Answer

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Best answer

(a) MR 

MR = k (constant) 

Revenue function R = ∫(MR) dx + c1 

= ∫kdx + c1 

= kx + c1 

When R = 0, x = 0, ⇒ c1 = 0 

R = kx

Demand function p = R/x = kx/x = k constant 

⇒ p = MR

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