Answer:
(a) $570
(b) $680
(c) $110
Explanation:
(a) Total revenue refers to the revenue that is obtained by selling a particular quantity of goods at a particular price.
Hot Air's total revenue when the quantity is 3 rides per month:
= Quantity of rides × Price per ride
= 3 × $190
= $570
(b) Hot Air's total revenue when the quantity is 4 rides per month:
= Quantity of rides × Price per ride
= 4 × $170
= $680
(c) Marginal revenue is defined as the revenue obtained from an additional unit sold.
In this case, it is calculated as the difference between the total revenue obtained from the 3 rides per month and the total revenue obtained from the 4 rides per month.
Hot Air's marginal revenue when the quantity increases from 3 rides to 4 rides a month:
= $680 - $570
= $110
Missing information: Market demand schedule is missing from the question. Hence, it is attached with the answer.
