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Econ 528 Cheat Sheet

Autor:   •  April 2, 2016  •  Course Note  •  829 Words (4 Pages)  •  90 Views

Page 1 of 4
  1. Marginal Cost, [pic 1]
  2. To find the profit-maximizing price, we need to find the price at which MR = MC.
  1. [pic 2]
  2. , plug MR = MC to find the quantity[pic 3]
  1. Profit-maximizing price (plug the quantity from above)
  2. Total monthly profit, = P.Q – TC[pic 4]
  3. Output level that will maximize the profit,
  1. Profit maximization requires: MR = MC
  2. ***When price is stable (constant), price equal marginal revenue***
  1. Optimal quantity for non-profit organization
  1. For a not-for-profit organization, [pic 5]
  2. Will create an equation, find the value of Q, if in the form of quadratic equation,         [pic 6]
  3. Quadratic equation will yield two values of X, use the higher value of X
  1. Output, marginal cost, average cost, price, and profit at the average cost-minimizing activity level
  1. [pic 7]
  2. Average cost minimization requires that MC = AC (will yield two values of Qs, use the positive value) The positive Q is the output
  3. Plug the Q value into MC equation to find MC
  4. Plug the Q value into AC equation to find AC
  5. , plug the Q value to find price[pic 8]
  6. , plug the price and Q value to find profit[pic 9]
  1. Output, price, and total revenue at the revenue-maximizing activity level
  1. Total revenue is maximized at the output level where MR = 0
  1. Demand curve with quantity expressed as a function of price
  1. Plug in the values: [pic 10]
  1. Demand curve with price expressed as a function of quantity
  1. Rearrange the equation: [pic 11]
  1. Point price elasticity of demand at the price of $5
  1. Find the quantity at $5 then [pic 12]
  2. Price elasticity: [pic 13]
  3. Can be elastic(>1), inelastic(<1), or unitary elastic(=1)
  1. Profit maximization requires: MR = MC
  2. Market equilibrium requires: QD = QS
  3. Price elasticity of demand: [pic 14]
  4. [pic 15]
  5. [pic 16]
  6. [pic 17]
  7. [pic 18]
  1. [pic 19]

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