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September 13, 2015 at 6:07 pm
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
September 13, 2015 at 10:29 pm
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.
September 10, 2015 at 5:08 pm
I am confused about MR=120-0.002Q
September 10, 2015 at 5:17 pm
The formula is given on the formula sheet, once you have calculated a and b for the price demand equation.
September 10, 2015 at 6:09 am
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?
September 10, 2015 at 8:42 am
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.
September 10, 2015 at 4:08 pm
thank you sir.
September 10, 2015 at 4:28 pm
You are welcome
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