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Quick Maths Question |
max99
Joined: Nov 24, 2004
Posts: > 500
From: Manchester (@ Uni)
PM |
Okay quick one, my head is stuck 2day and this simple thing isnt working in my head
Equation: Lerner Index = (Price Minus Marginal Costs) / Price
Lerner index is 0.65, Marginal Cost is £35, whats P ? (price)
Thanks
Max |
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masseur
Joined: Jan 03, 2003
Posts: > 500
From: Sydney, London
PM |
starting with l = (p - m) / p
divide right side top and bottom by p gives
l = (1 - m/p) / 1
i.e.
l = 1 - m/p
take m/p to the left (making it positive) and bring the l to the right, this gives
m/p = 1 - l
i.e. 35 /p = 1 - .65
which is
35 /p = .35
from here you can see p must be 100. if not... take the p to the right and the .35 to the left giving
35/.35 = p
therefore p = 100
check by putting 100 back into the original equation
.65 = ( 100 - 35 ) /100
.65 = 65 / 100
.65 = .65
QED 
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max99
Joined: Nov 24, 2004
Posts: > 500
From: Manchester (@ Uni)
PM |
cheers mate, appreciate it  always forget i can divide both sides by p !!! |
modaristis
Joined: Feb 17, 2009
Posts: 1
PM |
you could also do this:
I = (p-m)/p
.65 = (p-35)/p
65/100 = (p-35)/p
65*p = 100*(p-35)
65*p = 100*p - 3500
100*p - 65*p = 3500
35*p=3500
p=3500/35
p=100 |
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Posted: 2009-02-22 18:57
