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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
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we increase output between 1 to 2 units, not what happens exactly at 2
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units.
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3 21 5 4 This is shown even more precisely by what happens at 5 units. When
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we increase output from 4 to 5 units, total revenue increases by $1. But
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what if we wanted to know exactly what happened at 5 units? At that
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point technically, the slope of a tangent line (the blue line shown on the
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previous page) is really zero, indicating that total revenue has reached
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its maximum. Looking at the discrete changes alone we couldn’t
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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.
 Fall '10
 BAILEY
 Economics

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