Description
price = intercept-slope*quantity; marginalRevenue = intercept-2*slope*quantity.
An economic model specifies how quantities, prices or marginal values relate under stated assumptions. A derivative, reaction function or first-order-condition term is a local model object rather than an empirical finding or complete equilibrium solution.
price = intercept-slope*quantity; marginalRevenue = intercept-2*slope*quantity.
When to use this tool
Use Monopoly Linear Demand Marginal Revenue when checking one explicit theoretical economic-model relationship.
How to use the tool and how it works
- Enter intercept, slope, quantity. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read price, marginalRevenue. Use the output convention below.
Require positive slope and nonnegative quantity. price = intercept-slope*quantity; marginalRevenue = intercept-2*slope*quantity.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| intercept | Intercept | Required. Finite number. |
| slope | Slope | Required. Finite number; strictly above 0. |
| quantity | Quantity | Required. Finite number; minimum 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| price | Price | Required. Finite number. |
| marginalRevenue | Marginal Revenue | Required. Finite number. |
{
"input": {
"intercept": 100,
"slope": 2,
"quantity": 15
},
"output": {
"price": 70,
"marginalRevenue": 40
}
}Limitations and assumptions
- The linear inverse-demand model can return negative prices or marginal revenue. It does not optimize monopoly output or restrict the quantity to an economically positive-price region.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a complete model, defensible parameter estimates and suitable identification before drawing empirical or policy conclusions.
References
Similar or alternative tools
- Marginal Product Elasticity Term
elasticity = suppliedMarginalProduct*inputQuantity/outputQuantity; if the direct product overflows or spuriously underflows, reorder multiplication with the input/output ratio.
- Marginal Expenditure Wedge
wedge = quantity*priceDerivative; marginalExpenditure = price+wedge.