Your assignment is to write an original report that gives essay – style answers to the
questions posed below. Be sure to address every point of discussion. The report should
include explanations and interpretations when requested. You should label units when
appropriate. Papers should be typed and reasonably formatted and should read as an
and not a list of equation and values. You do not need to include your
scratch work or
calculations, but you should include any equations or functions that you are asked to
as part of the prompt. Your conclusions should make sense in the context of the
should be consistent throughout the paper (make sure you don’t contradict yourself).
You are required to print a copy of your paper and submit to your instructor
before or after
class or to your instructor’s mailbox by the deadline. Please staple multiple pages
In addition to the submitted hardcopy, you are required to submit an
electronic version of
your paper. Email your paper by the deadline to the instructor’s email address.
Please save the file using the following template:
(last name).(first name).(section number).docx
For example: morgan.mindy.7.docx
This assignment is worth 100 points and is due Wednesday, April 11 by 5pm. If your
submitted by the early deadline (5pm Friday, April 6) you will receive 10 points extra
your paper is submitted by the late deadline (5pm Monday, April 16) you will receive a
point penalty. Papers will not be accepted after April 16, no exceptions.
You will be asked to graph certain functions. You may do this using an
online graphing utility
such as the Desmos graphing calculator (desmos.com). Please be sure to adjust the
match the domain of the revenue function and include the entire graph. Prompt:
Suppose you start your own business. Select a product your business will produce that could
be reasonably manufactured for your assigned variable cost per unit. The chosen
must be a general description, for example a smartphone, and not a specific brand or item, for
example, do not choose an iPhone 6. Use your assigned variable cost and assigned fixed cost
construct a linear cost function �(�) to describe the total monthly cost for your
Let � represent the quantity of units of your product demanded each month and let
represent the price per unit at which you sell the product, in dollars. Use your
assigned price –
demand equation to construct the revenue function �(�) to describe your company’s
monthly revenue. Then determine the domain of the revenue function which represents the
feasible range of units that could be produced.
Construct the profit function �(�) to describe your company’s total monthly profit. Determine
the break-even points. What production levels will cause your company to make profit? What
production levels will cause your company to incur a loss? Include a graph of the
cost functions to support the break-even points that you found and label the break-even
points on your graph using coordinates.
Now choose a monthly production level that is within the domain of the revenue function
you found. You can select this production level without using further analysis. Determine
total cost, revenue, and profit at your chosen production level. Then determine the
cost, marginal revenue and marginal profit at your chosen production level and interpret
of these values.
According to the price – demand equation, at what unit price ($�) are you selling your
if demand is at your chosen production level? Write a function for the elasticity
�(�) (be sure to include this function in the paper). Use �(�) to determine whether the
demand is elastic, inelastic, or has unit elasticity at the unit price you found for
the demand at
your chosen production level. Discuss how increasing or decreasing the price would affect
revenue. What unit price would result in unit elasticity?
Based on the analysis you have done so far and without calculating the optimal production
level that you will find in the next part, determine whether you should increase or
production from your chosen production level in order to maximize total profit. Justify your
answer by including what information you’ve collected so far that lead you to your
Determine the optimal production level that will maximize profits and find the maximum
profit that your company could achieve. Show that you have found the maximum profit in two
ways: algebraically and graphically.
Determine the revenue and cost at this optimal production level. Use the price – demand
equation to determine what price should you sell each unit so that you can maximize
Draw some conclusions about your business’s optimal operations. You should conclude your
report with a brief summary on the importance of marginal analysis to business
how you might apply these concepts in the future.Your grade will be evaluated on
• Interpretation of values
• Following directions for student chosen values
• Labeling units properly and appropriately
• Do not use intermediate rounding during calculations to avoid rounding errors. Round
at the very end, only if appropriate.
o Example: when working through a calculation such as
5 + ,250 − 4 117 3 5 (6)
you should simplify under the radical to obtain
5 + ,250 − 72 17
5 + ,4178 17
then you should round at the very end to obtain
5 + ,4178 17
37 = 0.56
o Intermediate rounding will lead to rounding errors such as:
5 + ,250 − 4 117 3 5 (6)
5 + √205.43
5 + 14.33
37 = 0.52
and it not as accurate as we would like you to be.
o Example: if you are describing a value in terms of dollars, we typically
the hundredth decimal. So instead of stating $<=>
, you should write $6.77
• Use exact form whenever possible.
o Example: use the exact value A?
instead of the decimal approximation 1.86 when
writing functions or working through calculations requiring irrational numbers.
o Keep in mind that for numbers such as A
= 0.5 or ?
= 0.6, you can use either the
decimal or the fraction form since these are rational values and using the
decimal form will not affect any rounding errors.