Skip to Content

Dundee EC40009 – The Marginal Revenue A Seller Receives

Submitted by • January 17, 2019

Question
In the chapter, we noted that the marginal revenue a seller receives can be expressed as

MR = P + (?P/?Q) Å~ Q.

a. Using this formula as a starting point, show

that marginal revenue can be expressed as

MR = P(1 + 1/ E D ), where E D is the price

elasticity of demand.

b. Using your knowledge about the price

elasticity of demand, explain why the

marginal revenue a firm with market power

receives must always be less than the

price.

c. Using your knowledge of the price elasticity

of demand, explain why the marginal revenue

a perfectly competitive firm receives

must be equal to the pric

Voted by:
Voted by Admiiin

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>