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Hello John.
I have read that if the demand line is: y=ax+b , the MR (marginal revenue) line has a gradient double in value, y=2ax+b.
But why is that? I mean what is the reasoning behind that?
Thank you.
Why have you not watched my lectures on this? I explain in the lectures and you cannot expect me to type out all my lectures here!!!
The revenue is the price multiplied by the quantity, so equals ax^2 + bx
The marginal revenue is got by differentiating the revenue equation, which gives MR = 2ax + b.Differentiation is not examinable in any of the ACCA exams, which is why the marginal revenue formula is given on the formula sheet!!!
Thank you John! That is a very concise and helpful answer. I appreciate it.
(I am scanning a text book all the way through to get an overview.)
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