Economics

[archived_user]

Can somebody please explain how is it derived?
Change in total revenue (ΔTR), the numerator of the ratio, can be written as (P)(ΔQ) + (Q)(ΔP).

 

[archived_user]

If ΔP is small and ΔQ is small, so that ΔPΔQ is really, really small and can safely be ignored,
TR + ΔTR = (P + ΔP)(Q + ΔQ) = PQ + PΔQ + QΔP + ΔPΔQ = TR + PΔQ + QΔP + ΔPΔQ
ΔTR = PΔQ + QΔP + ΔPΔQ ≈ PΔQ + QΔP