+1 vote
in General by kratos

For the demand function p x = 100 - 6x2, find the marginal revenue and also show that MR = p$[1 - 1/eta\_"d"]$

1 Answer

+4 votes
by kratos
 
Best answer

Given p = 100 - 6x2

we know that R = px

R = $(100 - 6x^2)x = 100x - 6x^3$

Marginal Revenue (MR) = $"dR"/"dx" = "d"/"dx" (100x - 6x^3)$

LHS = MR = $100 - 18x^2$ ....(1)

Differentiating p, with respect to, 'x' we get,

$"dp"/"dx" = - 12 x$

$"dx"/"dp" = (-1)/(12x)$

$therefore eta_"d" = - "p"/x * "dx"/"dp"$

$= (- (100 - 6x^2))/x * ((-1)/(12x))$

$= (100 - 6x^2)/(12x^2)$

$therefore "RHS" = "p"(1-1/(eta_"d"))$

$= (100 - 6x^2)(1 - (12x^2)/(100 - 6x^2))$

RHS = $(cancel(100 - 6x^2))((100 - 6x^2 - 12x^2)/cancel(100 - 6x^2))$

= 100 - 18x2 ...(2)

From (1) and (2), LHS = RHS

$therefore "MR" = "p"(1 - 1/eta_"d")$

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