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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Pricing decisions
Mr Moffat,
could you please help me with the following? I am afraid the question is one of unintelligent ones, probably I missed something while listening to the lectures…
Demand 5000 when price 400 and demand is 6000 when price is 380.
Whell, P=500-0.02Q – this is clear.
But how do they come to MR=500-0.04Q?
I remember only the following; MR= change in total revenue / change in quantity
MR does not equal change in revenue/change in quantity!
The formula for the marginal revenue is given on the formula sheet.
MR = a – 2bQ (where a and b are the same as in the price demand equation).
In your example, a = 500 and b = 0.02Q
So MR = 500 – (2 x 0.02) Q
how could I write such a nonsense… MR is the change in Revenue between current price*units and previous price* units.
No problem 🙂