# Marginal Cost and Revenue Marginal Revenue

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Marginal Cost and Revenue Marginal Revenue
3.05 Marginal Cost Analysis
Name:______________________________________________
Step One: Launch the data generator to get started (located in the last page of the lesson, or use the numbers given below:
Quantity
Price (in whole dollars)
Total Revenue
Marginal Revenue
Total Cost
Marginal Cost
Profit (or loss)
0
42
0

35

1
41
41 68

2
40
80 94

3
39
117 107

4
38
152 114

5
37
185 129

6
36
216 180

7
35
245 235

8
34
272 296

Step Two: Determine a product market (a specific good or service) appropriate to the prices listed. This will be the title of your graph and data table. You will be creating a graph on Step Four.
Step Three: Calculate the marginal revenue, marginal cost, and profit for each quantity level. Fill in the data table. Use the Case Study presentation at the bottom of the lesson page in 3.05 for step by step instructions on how to calculate your figures. This case will also help you construct your Step Four. o Total Revenue = Quantity x Price o Total Cost = Fixed Cost + Variable Cost o Profit or Loss = Total Revenue – Total Cost o ―Marginal means additional o Marginal Revenue is computed by finding the difference of the previous two quantities (total revenue of pair #2 - #1) o Marginal cost is computed by finding the difference of previous two quantities for total cost (total cost of pair #2 - #1)

Step Four: Create a graph of the data. Quantity is along the x-axis and price is along the y-axis. Graph the marginal revenue curve and the marginal cost curve. You can create your graph by drawing it on paper, then take a picture of it or scan it to your computer. Also you can Paste the results of your table on Step 3 and generate the graph in MS Excel or a similar spreadsheet program.

Copy and paste your graph here.

Step Five: Answer the following questions.
a) What product market did you choose for this data to represent? Explain why. (tip: look at prices)

b) Where does marginal cost nearly equal

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