Questions about calculating marginal revenue

CFA Level I Economics
#1

MR=△TR/△Q
△TR=TR(after)-TR(before)=(P+△P)(Q+△Q)-PQ=P△Q+Q△P+△P△Q
therefore, MR=△TR/△Q=P+△P+Q△P/△Q.

BUT the actual function of MR is MR=P+Q△P/△Q

Why there is a difference △P between these two functions?

#2

What you’re calling the actual function is an approximation, when ∆P is small enough to ignore.

1 Like
#3

Thank you!

#4

My pleasure.