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Demand Analysis in Monopoly
The general form of the demand relationship is
QD = a – bP or, P = a/b – (1/b)QD
total revenue = TR = "P"×"Q = (a/b)QD – (1/b)" "Q" _"D" ^"2"
MR = ΔTR/ΔQ = (a/b) – (2/b)QD
AR = TR/QD.
In the monopoly market model, AR is the same as the market demand schedule.
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