Marginal Analysis -- Paola Martinez

Q TB(Q) TC(Q) NB(Q) MB(Q) MC(Q) MNB(Q)

0 0 0 0 -- -- --
1 200 30 170 200 30 170
2 300 70 230 100 40 60
3 390 120 270 90 50 40
4 450 180 270 60 60 0
5 480 255 225 30 75 -45
6 500 330 170 20 75 -55

Marginal Analysis--Paola Martinez

500

375
TB(Q)
TC(Q)
250 NB(Q)
MB(Q)
P

125 MC(Q)
MNB(Q)

-125
0 1.5 3 4.5 6
Q

7 optimal places
1. NB line is at its peak (quantity 3 and 4)

2. NB is at its largest number (quantity 3 and 4)

3. MB and MC lines cross (quantity 4)

4. MB and MC equal to each other (quantity 4)

5. MNB line crosses the x-axis (quantity 4)

6. MNB is equal to zero (quantity 4)

7. Greatest vertical distance between TB and TC

1
2
Output Price TR MR TC ATC MC Monopoly Profit
0 20 0 -- 20 -- -- -20
1 18 18 $18 21 $21.0 $1 -3
2 16 32 $14 24 $12.0 $3 8
3 14 42 $10 30 $10.0 $6 12
4 12 48 $6 40 $10.0 $10 8
5 10 50 $2 55 $11.0 $15 -5

1st Graph -- Monopoly 2nd Gra

60 30

45 Series1
Series2 22.5
30 Series3
Series4

Price
15 Series5 15
$

Series6
0 Series7
7.5
-15

-30 0
0 1.25 2.5 3.75 5 0 1.25
Output

Marginal Analysis vs Monopoly 4 Steps to

One of the things that they have in common is that they are
both used to find out at what quantity the company will 1. Go to where the Ma
maximize its profits, how much they can sell it for, and how (MC) lines cross, that w
much it will cost to produce. From what we can observe from producing at. In this sc
both of the charts they look very similar, the one for marginal
analysis is a series of what if's where marginal benefit and 2. Go up to the deman
marginal cost actually equal to each other. For the monopoly doing so you will know
exercise the numbers are more realistic to what a business which is $14
will come across, marginal revenue and marginal cost are not
likely to equal to each other. 3. Go down (or up) to t
tell you how much it w
$10

4. Solve for the area o

(illustrated on Graph 2
profit. In this scenario
subtract them 42-30=1

1
 2nd Graph-- Monopoly

Price
MR
ATC
MC

1.25 2.5 3.75 5

Output

4 Steps to Solve for the Monopoly Profit

. Go to where the Marginal Revenue(MR) and Marginal Cost

MC) lines cross, that will give you the quantity you want to be
roducing at. In this scenario it is about 3

. Go up to the demand line and see the price value it is at by

oing so you will know how much you can sell the product for
hich is $14

. Go down (or up) to the Average Total Cost (ATC) and this will
ell you how much it will cost to produce the product which is
10

. Solve for the area of the rectangle that you created

llustrated on Graph 2--Monopoly) and the result will be the
rofit. In this scenario it is 3(14)=42 and 3(10)=30 now you
ubtract them 42-30=12, making the monopoly profit about $12