The Student Room Group
Uni students - Complete our survey >>
Uni students - Complete our survey >>
Uni students - Complete our survey >>

Relationship between MR and PED

Hi, why doesn't this work:

Old Revenue: PQ
New Revenue When quantity increases by 1: (P+ΔP)(Q+1)
MR=(P+ΔP)(Q+1)-PQ=P+QΔP+ΔP

Since e=(PΔQ)/(QΔP)

MR=P+[(PΔQ)/e]+ΔP
As ΔQ=1
MR=P+[(P)/e]+ΔP
MR=P[1+(1/e)+(ΔP/P)]

which is different from the normal result of
MR=P[1+(1/e)]

Quick Reply

Related discussions

Latest

Trending

Trending

Articles for you