21_ProfitMaximizationII

21_ProfitMaximizationII - To develop a complete mind, study...

Info iconThis preview shows pages 1–15. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: To develop a complete mind, study the science of art, study the art of science. Learn how to see. Realize that everything connects to everything else. Leonardo Da Vinci ECON 410 Profit-Maximization II 2 Class 21 - Profit Maximization II Self-Clicker Question (P): Which of the two formats would you prefer for your 3-hour final exam? 1. 25 Multiple Choice, 0 Long- Form 2. 20 Multiple Choice, 4 Long- Form 4 Class 21 - Profit Maximization II Sus tainab le Indus try Profits Power of Input Suppliers Supplier Concentration Price/Productivity of Alternative Inputs Relationship-Specific Investments Supplier Switching Costs Government Restraints Power of Buyers Buyer Concentration Price/Value of Substitute Products or Services Relationship-Specific Investments Customer Switching Costs Government Restraints Entry Entry Costs Speed of Adjustment Sunk Costs Economies of Scale Network Effects Reputation Switching Costs Government Restraints Subs titutes & Complements Price/Value of Surrogate Products or Services Price/Value of Complementary Products or Services Network Effects Government Restraints Indus try Rivalry Switching Costs Timing of Decisions Information Government Restraints Concentration Price, Quantity, Quality, or Service Competition Degree of Differentiation Cons umer Problem Cons umer Problem Producer Problem Sus tainab le Indus try Profits 5 Class 21 - Profit Maximization II Profit Revenue - Cost 6 Class 21 - Profit Maximization II =pq-C(q) The quantity consumers are willing to buy is affected by the price the firm sets. 7 Class 21 - Profit Maximization II Profit as a Function of Price Revenue - Cost With a market demand of D(p ) and a cost function of C(q), =pD(p)-C ( D(p) ) 8 Class 21 - Profit Maximization II Profit Maximization 1. Determine the firms profit function as a function of the choice variable(s). 2. Take the first order condition of the firms profit function with respect to the choice variable(s). 3. Solve for the profit-maximizing price, quantity, and/or profit levels. 9 Class 21 - Profit Maximization II Profit Maximization when Profit is a Function of Price 1. Determine the firms profit function as a function of price. 2. Take the first order condition of the firms profit function with respect to price. 3. Solve for the profit-maximizing price. 4. Plug the profit-maximizing price into the market demand function to determine the profit-maximizing quantity level. 5. Plug the profit-maximizing quantity and/or price levels into the profit function to determine the profit- maximizing profit level. 10 Class 21 - Profit Maximization II 11 Class 21 - Profit Maximization II Profit Revenue - Cost 12 Class 21 - Profit Maximization II =pq-C(q) The firm has to alter its price to sell a specific number of units. 13 2 4 6 8 10 12 2 4 6 8 10 12 Quantity $ Deman d Class 21 - Profit Maximization II 14 2 4 6 8 10 12 2 4 6 8 10 12 Quantity $ Deman d Class 21 - Profit Maximization II Group-Clicker Question (P): How will the profit-maximizing price level...
View Full Document

This note was uploaded on 01/05/2012 for the course ECON 410 taught by Professor Codrin during the Fall '07 term at UNC.

Page1 / 60

21_ProfitMaximizationII - To develop a complete mind, study...

This preview shows document pages 1 - 15. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online