11. Demand, Price, and Revenue in Excel
Problems
1.
Make an excel spreadsheet showing the demand function and the various variables related to demand.
Use the
spreadsheet to calculate the simple demand function, the price function, the revenue function, the marginal
revenue function, and the point price elasticity of demand function.
2.
Use the excel spreadsheet to create schedules for price, revenue, marginal revenue, and point price elasticity of
demand.
Make the spreadsheet so that the initial quantity and the increment by which quantity increases can be
easily changed.
3.
Use the excel spreadsheet to calculate the revenue maximizing level of output and show the price, revenue,
marginal revenue, and point price elasticity of demand associated with that quantity.
The Demand Function
First, type in the demand function.
Q
d
= -20,000 - 20P + .5A^.5 - 50P
c
+.1P
s
+ 5Y
Each number should be in its own cell.
The other symbols can be placed in the same sell.
For example, in A1, you
would put
Q
d
=
, but in B1 you would put
20000
, then in C1 you would put
-20
and in D1 you would put
P +
and so
on.
A
B
C D
E F
G
H I
J K
L M
1
Qd =
20,000
-20 P +
0.5 A^
0.5 -50 Pc +
0.1 Ps +
5 Y
Next, type in the names for the various variables except for the goods own price, like :
A =
Pc =
Ps =
Y =
These would be in A2, A3, and so on.
Each name goes in its own cell and all of these should be in the first column.
Then type in the initial values of the variables in the second column next to the appropriate name.
For example
1000000 goes next to A =.
Don. t put any . m. or . b. next to the numbers.
These would be in B2, B3, and so on.
A
B
C D
E F
G
H I
J K
L M
1
Qd =
20,000
-20 P +
0.5 A^
0.5
-50 Pc +
0.1 Ps +
5 Y
2
A=
1,000,000
3
Pc =
10
4
Ps =
600
5
y =
9000
Then type in . Qd =. in a cell below.
This would be in about A6.
In the cell to the right (B6) you type in:
=