Marginal revenue Marginal revenue is the rate-of-change of revenue as the output level y increases MR()- d dy(p(y)y =p(y)+y apy) dy dply)/dy is the slope of the market inverse demand function so dpy)ldy <0. Therefore MR(=p(y)+y dp(y) <p(y) d fory >0
Marginal Revenue Marginal revenue is the rate-of-change of revenue as the output level y increases; MR y ( ) d dy p y y p y y dp y dy ( ) ( ) ( ) ( ) = = + . dp(y)/dy is the slope of the market inverse demand function so dp(y)/dy < 0. Therefore MR y p y y dp y dy ( ) ( ) p y ( ) = + ( ) for y > 0
Marginal revenue E.g. if ply)=a- by then ROy=ply)y =ay - 2 and so MR=a-2by a-by= ply) fory >0
Marginal Revenue E.g. if p(y) = a - by then R(y) = p(y)y = ay - by2 and so MR(y) = a - 2by < a - by = p(y) for y > 0
Marginal revenue E.g. if ply)=a- by then ROy=ply)y =ay - 2 and so MR=a-2by a-by= ply) fory >0 ak p(y)=a-by a/2b alb y MRO)=a- 2by
Marginal Revenue E.g. if p(y) = a - by then R(y) = p(y)y = ay - by2 and so MR(y) = a - 2by < a - by = p(y) for y > 0. a p(y) = a - by a/b y MR(y) = a - 2by a/2b
Marginal cost Marginal cost is the rate-of-change of total cost as the output level y increases dc(y Mc(y)-dy E.g. if c(y)=F+ ay By then Mc(y)=a+2βy
Marginal Cost Marginal cost is the rate-of-change of total cost as the output level y increases; MC y dc y dy ( ) ( ) = . E.g. if c(y) = F + ay + by 2 then MC(y) = a + 2by
$ Marginal cost cy)=F+oy+βy2 Output unit y Mc(y)=c+2βy y
Marginal Cost F y y c(y) = F + ay + by 2 $ MC(y) = a + 2by $/output unit a