Chapter 2 Handouts What is a derivative

Chapter 2 Handouts What is a derivative

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Unformatted text preview: respect to Q, the equation for marginal revenue in this case is: MR = 10 – 2Q. Rather than figuring out what happens in a range, we can substitute in values for Q and find out exactly what happens at each point. When Q = 2, for example, the MR is 6 (= 10 – 2(2)). If we were to measure marginal revenue discretely using formula change Q TR MR MR in TR / change in Q for ranges we would get an MR of \$7. What a (discrete) (calculus) discrete measure of marginal revenue measures is what happens when 0 0 we increase output between 1 to 2 units, not what happens exactly at 2 1 9 9 8 units. 2 16 7 6 3 21 5 4 This is shown even more precisely by what happens at 5 units. When 4 24 3 2 we increase output from 4 to 5 units, total revenue increases by \$1. But 5 25 1 0 what if we wanted to know exactly what happened at 5 units? At that 6 24 -1 -2 point technically, the slope of a tangent line (the blue line shown on the 7 21 -3 -4 8 16 -5 -6 previous page) is really zero, indicating that total revenue has reached 9 9 -7 -8 its maximum. Looking at the discrete changes alone we couldn’t 10 0 -9 -10 identify this po...
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This note was uploaded on 05/06/2013 for the course ECON MBA6651 taught by Professor Bailey during the Fall '10 term at Troy.

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