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For any linear demand function with an inverse demand equation of the form P = a - bQ, the marginal revenue function has the form MR = a - 2bQ. [6] The inverse linear demand function and the marginal revenue function derived from it have the following characteristics: Both functions are linear. [7] The marginal revenue function and inverse ...
The consumer demand for mineral water at price is denoted by (); the inverse of is written and the market-clearing price is given by = (), where = + and is the amount supplied by proprietor . Each proprietor is assumed to know the amount being supplied by his or her rival, and to adjust his or her own supply in the light of it to maximize his ...
P(Q) = inverse demand function, and thereby the price at which Q can be sold given the existing demand C(Q) = total cost of producing Q. = economic profit. Profit maximization means that the derivative of with respect to Q is set equal to 0: ′ + ′ = where
The marginal revenue function is the first derivative of the total revenue function; here MR = 120 - Q. Note that the MR function has the same y-intercept as the inverse demand function in this linear example; the x-intercept of the MR function is one-half the value of that of the demand function, and the slope of the MR function is twice that ...
When a non-price determinant of demand changes, the curve shifts. These "other variables" are part of the demand function. They are "merely lumped into intercept term of a simple linear demand function." [14] Thus a change in a non-price determinant of demand is reflected in a change in the x-intercept causing the curve to shift along the x ...
The Ramsey problem, or Ramsey pricing, or Ramsey–Boiteux pricing, is a second-best policy problem concerning what prices a public monopoly should charge for the various products it sells in order to maximize social welfare (the sum of producer and consumer surplus) while earning enough revenue to cover its fixed costs.
A common type of implicit function is an inverse function. Not all functions have a unique inverse function. If g is a function of x that has a unique inverse, then the inverse function of g, called g −1, is the unique function giving a solution of the equation = for x in terms of y. This solution can then be written as
In microeconomics, a consumer's Marshallian demand function (named after Alfred Marshall) is the quantity they demand of a particular good as a function of its price, their income, and the prices of other goods, a more technical exposition of the standard demand function. It is a solution to the utility maximization problem of how the consumer ...