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MATA33H3 Lecture Notes - Lecture 11: Marginal Revenue, Piecewise, Linear Combination

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ceruleanjackal228

15 Jun 2018

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Elasticity of Demand

p = price

q = quantity sold/demand

Usually, p = f(q)

Economists need to understand how change in one quantity effects the other

to understand this, they use the quantity elasticity of demand, ◦

Find n in terms of q if

Categories of n

small relative change in price results in large relative change in demand

relative change in price = relative change in demand

large relative change in price results in small relative change in demand

Given the following equation of demand. Determine the category of n

Revenue

r = pq

We want to understand the effect of r when p or q is changed

1. Marginal revenue = 2.

If h is sufficiently small, then we can

approximate n by taking the lim h->0.

In this case,

Recall that f(q) = p

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MATA33H3 Full Course Notes

MATA33H3 Full Course Notes

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