p_eval04_l4_cost

p_eval04_l4_cost - 1.011 Project Evaluation Cost Revenue...

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1.011 Project Evaluation Cost & Revenue Functions Topics Breakeven volume for making a profit (if prices are known and you are a "price taker") Identifying a range of prices for which you can make a profit (assuming that demand varies with price) Choosing prices to maximizing profit Supply/demand/equilibrium - an overview Present economy
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Conditions for Profitability- Simple Linear Cost & Revenue Functions Cost = a + bV Price = P Revenue = PV Profit = PV - a - bV = (P-b)V - a Breakeven Volume = a/(P-b) Conditions for Positive Profits: Price > variable cost Volume greater than breakeven volume
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Breakeven Volume for Profitability Breakeven point P is where TR = TC Revenue = 1.5 V TC = 50 + V P 10 20 30 40 50 60 70 80 90 100 110 120 Volume 0 50 100 150 200 Cost Total Cost Revenue Profits Loss
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In General, Volume Varies With Price: The lower the price, the higher the volume Volume 0 250 Price
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Total Revenue Also Varies With Price: Revenue Declines if Price is Too High or Too Low 1234567891 01 1 1 2 1 3 1 4 Volume (Demand) for the Given Price 0 500 Price or Revenue Revenue Price
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 Volume (Demand) for the Given Price 0 500 $ Revenue Cost Maximizing Profit is not the Same as Maximizing Revenue Max Profit Max Revenue
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Maximizing Profit is not the Same as Maximizing Revenue
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p_eval04_l4_cost - 1.011 Project Evaluation Cost Revenue...

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