Hi
Where does the figures/formula for TR and MR come from?
I understand that Po = 400 + (0.25x1,440) = $760
and therefore Px = 760 - 0.25X
TR = 760X - 0.25X squared (why?)
MR = 760 - 0.5X (why?)
MC = 200 (2 persons x $100)
Thanks
Ask the Tutor ACCA APM
P5 June 2009 Qs 4
10y ago#1Po = 760 - 0.25 X
Revenue = Price x Quantity = Po X = 760X = 0.25 X^2
The mathematical way to get from Revenue to Marginal revenue requires you to differentiate this function to give Mr = dR/DX.
HOwever, you would not have been required to carry out that step. Instead a formula would have been provided in the exam something like:
If revenue, R = aQ - bQ^2
MArginal revenue = MR = a - 2bQ
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