| | Follow the Data | | DECSION: DETERMINE THE QUANTITY OF OUTPUT THAT MAXIMIZES ECONOMIC PROFIT |
| | DMA Sept 2017 |
| | | | Demand Function | | | Cost Function |
| | | | P= 170-20Q | | | C=100+38Q | | | Marginal |
| | DATA | Quantity | Price | Revenue | MR | Total Cost | MC | Profit | Profit |
| | | 0.0 | 170 | | | |
| | | 1.0 | 150 | | | |
| | | 2.0 | 130 |
| | | 3.0 | 110 |
| | | 3.3 | 104 |
| | | 4.0 | 90 |
| | | 5.0 | 70 |
| | | 6.0 | 50 |
| | | 7.0 | 30 |
| | | 8.0 | 10 |
| | | 8.5 | 0 |
| | | 1. Fill in the blank cells |
| | | 2. Circle cell amounts: maximum revenue, minimum cost, maximum profit, mr-=mc. |
| | | 3. Circle the Q amount where MR=MC, Marginal profit is zero, profits are highest. |
| GRAPHS& | CURVES | On sheet of blank paper or graph paper plot each of the following: |
| | | 1. DEMAND CURVE - price and quantity pairs (price vertical and quantity horizontal) |
| | | 2. REVENUE CURVE - and show where revenue is the highest / quantity horizontal and revenue vertical |
| | | 3. TOTAL COST CURVE - and show where cost is the lowest : NOTE ADD THIS CURVE TO CURVE 1 GRAPH. / same format |
| | | 4. PROFIT CURVE (2-3) - and show where profit is highest/ profit vertical and quantity horizontal |
| | | 5. MARGINAL PROFIT CURVE - show where marginal profit = 0. /marginal profit vertical and quantity horizontal |
| | | 6. MARGINAL REVENUE CURVE - and show where MR=MC / marginal revenue vertical and quantity horizontal |
| | | 7. MARGINAL COST CURVE - and show where MR=MC: NOTE ADD THIS CURVE TO THE CURVE 2 GRAPH / marginal cost |
| | | | vertical and quantity horizontal |
| | FUNCTIONS | 1. FROM TWO QUANTITY AND PRICE POINTS CALCULATE THE DEMAND FUNCTION |
| | | 2. FROM TWO COST AND QUANTITY POINTS CALCULATE THE COST FUNCTION |
| | DECISION | Verify that Q* is the same amount for MR=MC, Profit is highest amount, and Marginal profit is zero |
| | | | where Q* is the optimal amount of output to maximize profits. |
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Ecnm592monday1pm-5pmAgendaFollowtheData.xlsx
