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Mashal Khan says

Did we miss price elasticity of demand? Is it not in the course ?

John Moffat says

It isn’t lectured, but it is in the lecture notes and should make sense from there.

khan says

I am realy thankful to you sir, you make this topic too easy for me to understand

THANKS once again

John Moffat says

Thank you

nigelc says

Makmuqul, the equation is the derivative (differentiation) of the Total Revenue (TR) formula.

Selling Price P = a – bQ

Total Revenue, TR = PxQ = (a – bQ) x Q

= aQ – bQxQ

If we differentiate TR (ie find dTR/dQ) that last equation, we get a – 2bQ.

That is the marginal revenue. That is, the derivative of TR gives the marginal revenue (MR) or the rate of change of revenue for each unit increase in quantity.

So, P is the selling price.

TR = PxQ

MR = derivative/differentiation of TR = a -2bQ.

John Moffat says

Fine (and I go through this in the lecture and so I don’t know why you have repeated it), except that differentiation is explicitly not examinable in any of the ACCA exams.

That is why the formula for the marginal revenue is given in the exam.

maqmukul says

Dear Sir

I am confused about MR=120-0.002Q

John Moffat says

The formula is given on the formula sheet, once you have calculated a and b for the price demand equation.

Mohamed says

hi sir,

Are the exchange rates of a currency in different countries one of the kind of price discrimination when they are sold by fin.institution with a profit?

John Moffat says

No, because it is not the company who determines the exchange rates. Price discrimination is when they deliberately charge different prices, irrespective of the exchange rates.

Mohamed says

thank you sir.

John Moffat says

You are welcome