MGAB03H3 Chapter Notes - Chapter 3: Quadratic Equation, Microeconomics, Derivative
14 Aug 2015
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[note: this problem requires familiarity with elementary microeconomics and the ability to differentiate a simple function. : recall the equation for total revenue: tr = p*q. Tr = 1,000*p 2*p2: total cost = tc = (,000 + ,000) + ( + )*q = ,000 + *q. Substituting the demand function (1,000 2*p) for q: Tc = ,000-*p: first set the revenue function equal to the cost function and algebraically convert the equation to quadratic form (ap2 + bp + c = 0): Using a quadratic equation calculator, there are two values of p that solve this equation (i. e. , there are two breakeven points): Note: the above solution was obtained using the quadratic equation calculators at http://www. 1728. com/quadratc. htm and http://www. math. com/students/calculators/source/quadratic. htm. These calculators were located by entering quadratic equation calculator in the. We can double-check the results by verifying that profit is zero at the two breakeven points:
