0
$\begingroup$

From here and a pile of maths that I've done myself,

$x_1 = \frac{a}{a+b}\frac{m}{p_1} \\ x_2= \frac{b}{a+b}\frac{m}{p_2}$

This yields inverse demand equations, when you have numbers stand in for $a$ , $b$, $m$, and $p_i$, of the form:

$p(x_i) = \frac{STUFF_i}{x_i}$

Dropping the other good and treating $x_i$ as $Q$, we have the marginal revenue equation, the derivative of $p(Q)Q$.

$MR = p'(Q)Q + p(Q) \cdot 1$

But

$MR = \frac{-STUFF}{Q^2}Q + \frac{STUFF}{Q} = 0$

So something is either wrong or these sorts of functions just don't have marginal revenues. Could someone tell me what sort of basic mistakes, mathematical or conceptual, are being made?

New contributor
ifly6 is a new contributor to this site. Take care in asking for clarification, commenting, and answering. Check out our Code of Conduct.
$\endgroup$
  • $\begingroup$ You can answer your own question for others to see. I focused on the “easy” part and did not think of the set up for this question. $\endgroup$ – bajun65537 Nov 8 at 17:17

Your Answer

ifly6 is a new contributor. Be nice, and check out our Code of Conduct.

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.