ib-economics-quantitative

Topic 5 - Calculating costs, revenues, profits, and levels of outputYou need to be able to: Calculate total, average and marginal product from a set of data and/or diagrams. Calculate total fixed costs, total variable costs, total costs, average fixed costs,average variable costs, average total costs and marginal costs from a set of dataand/or diagrams. Calculate total revenue, average revenue and marginal revenue from a set of dataand/or diagrams. Calculate different profit levels from a set of data and/or diagrams. Calculate the shut-down price and the break-even price from a set of data. Calculate from a set of data and/or diagrams the revenue maximizing level of output.Calculate total, average and marginal product from a set of data and/or diagrams.Step 1If you are given a table that is incomplete, you need to calculate the total product, averageproduct, and the marginal product values that are missing, using the appropriate equations:Total product = TP (of n - 1 variable factors) + MP of the n th variable factorAverage product =Marginal product =Number ofVariableFactors (V)Total Product(TP) (Output)AverageProduct (AP)MarginalProduct (MP)0 0 0 01 52 6 73 21 94 325 96 56 117 98 8.59 8 410 75E.g. Total product = TP (of n - 1 variable factors) + MP of the n th variable factorIn the table above, TP from 2 variable factors = TP from 1 variable factor + MPthe second variable factor = 5 + 7 = 12 units.ofAverage product =In the table above, AP of the third variable factor = TP = 21 = 7V 3Produced by Ian Dorton & Jocelyn Blink Page 33