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the equation is: P = 600 – 0.4Q.
The variable cost is 100 so because MC=MR
MC=600-0.8Q
So why we doubled the gradient to 0.8 when we tried find the quantity using the variable cost of 100 ?It is because to get the marginal revenue, we differentiate the total revenue and this produces 2b in the equation.
However, since differentiation is not examinable, the formula for the marginal revenue is given on the formula sheet in the exam!!
You really should watch my free lectures on this. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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