Q:

The question 1 in Part 3

Internet Browsers

How to draw and calculate the Marginal Revenue based on the Demand Curve??

A:

Graphically, the marginal revenue curve has the same P-axis intercept as the demand curve and is twice as steep (i.e. has a slope twice as large in absolute value). Mathematically, the easiest way to find it is to solve for P in the demand curve and then multiply the slope by 2. For example:

Qd = 40-2P

2P = 40-Qd

P = 20-Qd/2

so then MR = 20-Q, and you can go back and solve for Q.

## Thursday, December 13, 2007

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