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Line 13: For example assume cost, C, equals 420 +60Q + Q<sup>2</sup>. then MC = 60 + 2Q<ref>Perloff, Microeconomics, Theory & Applications with Calculus (Pearon 2008) 240.ISBN 0-321-27794-5</ref> Equating MR to MC and solving for Q gives Q = 20. So 20 is the profit maximizing quantity - to find the profit maximizing price simply plug the value of Q into the inverse demand equation and solve for P. The inverse demand function is the form of the demand function that appears in the famous Marshallian Scissors diagram. The function appears in this form becuase economist place the independent variable on the y axis and the dependent variable on the y axis. The slope of the inverse funtion is ∆P/∆Q. This fact should be kept in mind when ~~clcullating~~calculating elasticity. The formula for calcularing elasticity is PED =(∆Q/∆P) x (P/Q). == References ==

Inverse demand function: Difference between revisions