Simple theory of profit maximization in oil production

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From the simple theory of profit maximization in oil production, it can be shown that the price (P) is related to marginal revenue (MR) through price elasticity of demand (E). Assume that the demand curve is linear and continuous, Revenue = PQ and that E= - (P/Q)(dQ/dP). Show mathematically the relationship to illustrate what would happen to gross oil revenue if the price of oil should decrease or increase and the demand for oil is price inelastic

Reference no: EM131101347

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