Last Minute Flashcards
Formula for Total Revenue?
TR = Price per Unit (P) x Quantity Sold (Q)
What is a Profit Function?
A profit function represents the relationship between a firm’s profit and its level of output (quantity produced and sold). It is derived from the difference between total revenue (TR) and total cost (TC).
Formula:
pi(Q) = TR(Q) - TC(Q)
Where:
pi(Q) is the profit as a function of quantity Q.
TR(Q) is the total revenue as a function of quantity Q.
TC(Q) is the total cost as a function of quantity Q.
Formula for Profit
TR - TC
Example of a Profit Function?
π =100Q − 2Q^2 −250
How do you find a maximum or a minimum point using differentiation?
Set the equation to 0 and then differentiate
How do you demonstrate whether something is a maximum or minimum using second order conditions?
You differntiate the derivative again and the answer is less than 0 then it is a maximum and if it is more than 0 then it is a minimum
How do you show that something follows the law of diminshing returns?
- First you find the derivative of the equation
- Then you sub in the value they give you and find the value (should be a number)
- Then you sub in half the value they give you and find the value (should be a number)
- If there is a decrease in the result when going from the half to the full value then there are diminshing results
How do you find marginal cost?
How do you find marginal revenue?
How do you find marginal product of labour?
Product Rule
Chain Rule
Quotient Rule
What is partial differentiation?
