Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

not all shipper costs are received as revenue by the transport industry,
it is not the average revenue curve for Mode Two. That latter curve
is derived by subtracting the associated cost function vertically from
the derived curve XYZ to yield UVW.
In Fig. 3.B.2 we have included a supply curve for Mode Two and il-
lustrated the market solution in the same manner as in Fig. 3.7. The
average revenue curve for Mode Two is also included to illustrate that
it does, indeed, show the revenue received by that mode.
Fig. 3.B.2 -- The Two Mode Associated Cost Model
a,b
We now continue with the derivation of the elasticity of Mode Two's
average revenue curve. Given the average revenue curve as defined by
equation (3.B.9), its elasticity will be
-1
Q2
F'(Q2 ) 1 Q2 Ct(Q 2 ) C(Q2 ) Q2 Z2,(Q 2 ) Z2(Q2) -1
(3.13.10) E2 ■ Fin
"2' C(Q2 ) F(Q2) Z 2 (Q 2 ) F(Q2 )
67