Microeconomics With Simple Mathematics Pdf -

Topic 3: Elasticity Without Calculus
Midpoint Formula:
E_d = [ (Q2 - Q1) / ((Q2+Q1)/2) ] / [ (P2 - P1) / ((P2+P1)/2) ]
Example: Price rises from $4 to $6, quantity falls from 120 to 80.
%ΔQ = (80-120)/((80+120)/2) = (-40)/100 = -0.4
%ΔP = (6-4)/((6+4)/2) = 2/5 = 0.4
E_d = -0.4 / 0.4 = -1  (unit elastic)
Graph: Demand curve with midpoint arc calculation shown.
 microeconomics with simple mathematics pdf

| Quantity (Q) | Total Cost (TC) | Marginal Cost (MC = $\Delta TC$) | | :---: | :---: | :---: | | 0 | $10 | – | | 1 | $18 | $8 | | 2 | $24 | $6 | | 3 | $32 | $8 | | 4 | $42 | $10 | | 5 | $54 | $12 |

If the market price is $10, the firm produces 4 units (Price = MC at $10). Profit = Total Revenue ($10 × 4 = $40) – Total Cost ($42) = –$2 loss. But producing 5 units would lose more ($50 - $54 = -$4). The simple math tells you to shut down if Price falls below Average Variable Cost—again, a calculation of simple division. Topic 3: Elasticity Without Calculus Midpoint Formula: E_d

Price falls from $10 to $8. Quantity demanded rises from 100 to 140.

Since $| -1.5 | > 1$, demand is elastic (consumers are price-sensitive). This simple arithmetic is the backbone of pricing strategy—no derivatives required.

Simple Math: Total Revenue (TR) minus Total Cost (TC). But the magic rule is: Profit is maximized when Marginal Revenue (MR) = Marginal Cost (MC). | Quantity (Q) | Total Cost (TC) |

Simple Table Method (No Calculus): | Quantity | Price | TR | TC | Profit | MR | MC | |----------|-------|----|----|--------|----|----| | 0 | – | 0 | 10 | -10 | – | – | | 1 | 20 | 20 | 18 | 2 | 20 | 8 | | 2 | 18 | 36 | 24 | 12 | 16 | 6 | | 3 | 16 | 48 | 32 | 16 | 12 | 8 | | 4 | 14 | 56 | 42 | 14 | 8 | 10 |

Profit peaks at Q=3 because MR (12) is closest to MC (8)? Wait – check the table: Profit is highest ($16) at Q=3. The precise math rule is: Increase Q as long as MR > MC. Stop before MR < MC. Simple.