Econ 528 Cheat Sheet
Autor: Billy Ling • April 2, 2016 • Course Note • 829 Words (4 Pages) • 708 Views
Page 1 of 4
- Marginal Cost, [pic 1]
- To find the profit-maximizing price, we need to find the price at which MR = MC.
- [pic 2]
- , plug MR = MC to find the quantity[pic 3]
- Profit-maximizing price (plug the quantity from above)
- Total monthly profit, = P.Q – TC[pic 4]
- Output level that will maximize the profit,
- Profit maximization requires: MR = MC
- ***When price is stable (constant), price equal marginal revenue***
- Optimal quantity for non-profit organization
- For a not-for-profit organization, [pic 5]
- Will create an equation, find the value of Q, if in the form of quadratic equation, [pic 6]
- Quadratic equation will yield two values of X, use the higher value of X
- Output, marginal cost, average cost, price, and profit at the average cost-minimizing activity level
- [pic 7]
- Average cost minimization requires that MC = AC (will yield two values of Qs, use the positive value) The positive Q is the output
- Plug the Q value into MC equation to find MC
- Plug the Q value into AC equation to find AC
- , plug the Q value to find price[pic 8]
- , plug the price and Q value to find profit[pic 9]
- Output, price, and total revenue at the revenue-maximizing activity level
- Total revenue is maximized at the output level where MR = 0
- Demand curve with quantity expressed as a function of price
- Plug in the values: [pic 10]
- Demand curve with price expressed as a function of quantity
- Rearrange the equation: [pic 11]
- Point price elasticity of demand at the price of $5
- Find the quantity at $5 then [pic 12]
- Price elasticity: [pic 13]
- Can be elastic(>1), inelastic(<1), or unitary elastic(=1)
- Profit maximization requires: MR = MC
- Market equilibrium requires: QD = QS
- Price elasticity of demand: [pic 14]
- [pic 15]
- [pic 16]
- [pic 17]
- [pic 18]
- [pic 19]
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