Scribd Logo
Upload

Welcome to Scribd!

  • Science

    Uploaded by

    Nitish Sharma
    9 views2 pages

    Original Title

    science

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Science

    Uploaded by

    Nitish Sharma

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    MRS x,y = - ∆Y/ ∆X = MUx/MUy

    The MRS (Marginal Rate of Substitution) formula represents the rate at which the consumption of
    commodity Y changes with each additional unit of commodity X. It is calculated by dividing the change in
    the quantity of Y (∆Y) by the change in the quantity of X (∆X), which is equivalent to the ratio of the
    marginal utility of X (MUx) to the marginal utility of Y (MUy).

    In the given permutations, the units of X and Y are provided for each permutation. By applying the MRS
    formula, we can calculate the MRS for each permutation as follows:

    Permutation A: MRS = MUx/MUy = 25/3 = 8.33

    Permutation B: MRS = MUx/MUy = -5/2 = -2.5

    Permutation C: MRS = MUx/MUy = -4/5 = -0.8

    Permutation D: MRS = MUx/MUy = -3/8 = -3.7

    Permutation E: MRS = MUx/MUy = -2/10 = -0.2

    Now, let's discuss the concept and application of total revenue and significant revenue:

    Total revenue refers to the overall amount generated from the sales of commodities and services. It is
    calculated by multiplying the total quantity of commodities and services sold by the price at which the
    buyer purchases the product. Total revenue encompasses all sources of income for an operations firm
    and does not directly include expenses related to manufacturing, delivery, employee wages, or taxes
    paid to the government. Although it does not indicate the total profits of the organization, total revenue
    plays a crucial role for operations owners.

    The formula for total revenue is:

    Total Revenue = Quantity * Price

    On the other hand, significant revenue represents the increase in revenue achieved by selling an
    additional unit of a commodity or service. For instance, if a firm sells its first 10 items for a total of
    Rs1000 and the next item is sold at Rs 9, the revenue generated from this additional unit is considered
    significant.
    The calculation for significant revenue is:

    MR (Marginal Revenue) = Change in Total Revenue / Change in Quantity

    To optimize results, a company should continue production and sales until the marginal revenue equals
    zero. This ensures that significant benefits are being obtained.

    You might also like