CamilaDelosrios
V1 Marginal Analysis
2.743.1videonotes AT
lo costof All
Definitions
Profit = Revenue – Cost or 𝑃 (𝑥) = 𝑅 (𝑥) − 𝐶(𝑥).
Revenue = (quantity)(price) or 𝑅 (𝑥) = 𝑥𝑝 where 𝑥 = quantity or demand and 𝑝 = price.
The marginal cost, marginal revenue, and marginal profit functions are derived as follows:
a) If 𝐶 (𝑥) is the TOTAL cost then 𝐶 (𝑥) is the marginal cost function.
b) If 𝑅(𝑥) is the TOTAL revenue function then 𝑅 (𝑥) is the marginal revenue function.
c) If 𝑃(𝑥) is the TOTAL profit function then 𝑃′(𝑥) is the marginal profit function.
1. C(x) is the total cost of producing x units of a particular commodity and p(x) is the unit price at which
all x units will be sold. Assume p(x) and C(x) are in dollars. Find marginal cost and marginal revenue:
R X
1 1 Terivative
pix 𝐶 (𝑥 ) = 𝑥 + 3𝑥 + 67 ; 𝑝(𝑥 ) = (45 − 𝑥)
4 5
x EX 3 RIX X pix R 1 1 9 Ex
marginalcost X's 45 y marginalrev
5 4542
RIX9 5
2. A manufacturer's total cost is 𝐶 (𝑞 ) = 0.001𝑞 − 0.05𝑞 + 40𝑞 + 4,000 dollars, where q is the number
of units produced.
a. Use marginal analysis to estimate the cost of producing the 251st unit. 30 10 40 60
Terivative Theless 30.603 10.1 40
191 0.00392 0.19 40
2501 0.003 25012 0.112501 40 202.58 25072511h
whyISitnot 25014251
b. Compute the actual cost of producing the 251st unit
malfunction
1251 250
10.001125113 0.0512513 401251140007 10.0012503 0.05125107 402501400077 203.20
Definitions
Marginal Average Cost, Revenue, and Profit Functions
Let x be the number of units produced and 𝑥 > 0
( )
a) Average Cost = 𝐶̅ (𝑥) = thus Marginal Average Cost = 𝐶̅ ′(𝑥)
( )
b) Average Revenue = 𝑅(𝑥) = thus Marginal Average Revenue = 𝑅′(𝑥)
( )
c) Average Profit = 𝑃 (𝑥) = thus Marginal Average Profit = 𝑃 ′(𝑥)
Note: FIRST find the average function and THEN take derivative
3. The total cost of printing x dictionaries is C(x) = 20,000 + 10x.
a. Find the average cost per unit if 1,000 dictionaries are produced.
b. Find the marginal average cost at a production level of 1,000 dictionaries and interpret the results.
c. Use the previous results to estimate the average cost per dictionary if 1,001 dictionaries are
produced.
a EX 94 2000,01
011000
1000 0098 3011 30
D Ex 101
201090
20,0001
20,000 t 10
E X 20,000 2
E X 299 no i'll000 YET 0.02 at 1k dictionaries
your arcostisdecreasing by 2cents
AL 7 30Wzcents
at 1,001 goingtobe 79.98
2x3
pix 244
22 t 1
R X UX
V2 Marginal Cost, Revenue and Profit Combined
1. A company’s market research department recommends the manufacture and marketing of a new headphone.
The research department presents the following price-demand equation:
x = 10,000 – 1,000p where x is the number of headphones that retailers are likely to buy at price $p per set.
Solve for price as a function of demand.
XIII P pix foot10
Find the domain of the function defined by the price-demand equation.
X20 A PLO
TJ 4020 Moreton
4 10000 0110,0007
a + 2x.lost
The finance department provides the cost function C(x) = 7,000
fixed
Find and interpret the marginal cost function C´(x).
ly 2 foreveryuniteverycostchangesby2 rocconst alwayscosts 2
Find the revenue function of x and find its domain.
Rix
B pix58 HO
RIX GOHO X Domain 0,10000
RIX tox
Find the marginal revenue at x = 2,000, 5,000, and 7,000. Interpret these results.
RX THO R 6 the.by 6
20007
R150007 0 O revnotchanging
R17000 4 decreasingrev
Find the intersection points of the cost and revenue function and interpret the results.
7000124
4
Foto 1,000
OFF
nooofoootex
7000000 20004 42 10,000
0 428000 7,000,000
HO X 10001
X 7000
ye
XXXXX
Breakevenpoints
Find the profit function and its domain.
PIX R C 49,000756k
2081000 7000
FootOx 7,00012
1 41,000
PIX 1 0 8 7000 0,100007 11000
98
Use marginal analysis to estimate the profit of the 1000th unit.
p X 500 8
Breakeven point
P1999 50019991
8 86 x
R x
V3 The Constant e and Compound Interest
Definition
The function y = ex is called the natural exponential function. e is defined by the limit
Irrational
and is the most convenient base to use in calculus. The limit is equal to 𝑒 ≈ 2.7.
1. Lydia is the manager of a company that manufactures small appliances. She determines that x units of
a particular appliance will be produced and sold at a price of p dollars per unit, where p(x) =
200e−0.01x. How much revenue should she expect when 100 units of the appliance are produced?
RIX X PA XKOOéo.ox
In1200 Ox
1001100
RIX 100200
7,357.59
2. How many units is she selling if her appliance is priced at $150?
X DIX 150 MEN.x
150 200cloud XD
0.75 et0.01 1
11710.75 the0.0 m th10.75 HE 0.04min10.15 0.014 2901.71
Definition
erepWhen compound cont
Suppose a principal P is invested at an annual interest rate r for t years and interest is compounded m
times per year, then the future value A is given by
𝑟
Itt
Atatine
𝐴 = 𝑃 1+
𝑚 Elly
If the compounding is continuous, then the future value is A is given by
𝐴 = 𝑃𝑒
continuously
3. What amount will be in an account after 5 years if $100 is invested at an annual nominal rate of 8%
compounded annually? Semiannually? Monthly? Daily? Continuously?
years b s 8 i fm
my A 10011 91115 146.93
215
M2 A 100119712151 148.02
M R A 10011 99 148.98
36515
M 36571 100111885 149.17
M A A 100,100815 149.18
V4 Continuous Compounding Applications
1. How long will it take an investment of $10,000 to grow to $15,000 if it is invested at 9% compounded
continuously? cont
A Pert
P 10,000 15,000 10,000eat P 2000
A15,000 1.5 eat A 11,000
111000 2000 ear
V0.09 In 15 O9t 5.5 e
t long
HOW
t 4.5years I in 5 5 152
ring
2. How long will it take money to triple if it is invested at 5.5% compounded continuously?
2000 761000
g
10,000 930,000
pop
O
I 51ns 3
3 e0551
198uears
0
3. The continuous compound rate of decay of carbon-14 per year is r=-0.0001238. How long will it take
a certain amount of carbon-14 to decay to half the original amount?
A Pert 8 0.0001238
20710
P p
IP Pe 0.0001238
F in
t C0.0001238
0001238T
t 5,591498ft
STOP
