Momma Robinson's Pizzeria Where should I produce?

get most least cost and most profit called Profit Maxization

Factor #of WorkersTP

PART 2:What do the graphs look like? causeresult change factor 1 timeoutput

PART 1: law of diminishing returns look at app and mpp what happens ??????

PRODUCTION change in output as MARGINAL PHYSICAL PRODUCT OR MPP new level of production is 6- old level mpp is 6

factortotal production MPP new- old level = = =

workers production mpp

1095 negative -1 Never Produce at this point

PART 2:What do the graphs look like? x axis= # of workers Y axis= app or mpp

now you see the three stages of production Increasing diminishing: define this production still increasing at a slower rate negative production: less NOT TIME PERIODS BUT WHAT IS HAPPENING TO PRODUCTION

COSTS Factor ProductionFixed Costs #of WorkersTPMPPFC Fixed costs do not change: will find at zero do not add them: remain the same or constant

TP MPPFC

Average Fixed Costs fixed costs as it relates to total production fc divided by total production fc/total production TPMPPFCAFC / 6= /15= /26=1.35

TPMPP FCAFC

PART 2:What do the graphs look like? X AXIS output Y AXIS cost GRAPH AVERAGE FIXED COST

NOW READY TO LOOK AT THE WHEN YOU CHANGE THE FACTOR

Variable Costs vc/totalproduction = avc #sTPMPPFCAFC VCAVC /6= = 80 80/15= = /26 = = /40= 4

TPMPPFCAFCVCAVC Variable Costs vc/total production

PART 2: What does this graph look like?avc

NOW WE WILL LOOK AT TOTAL COSTS TC= FC+ VC

AND THEN TC/ TP average total cost fc plus vc/ production tc/tp

#TPMPPFCAFCVCAVCTCATC =75 75/6= = /15= = /26=5.97

TPMPPFCAFCVCAVCTCATC

TPMPPFCAFCVCAVC TCATC **note it is now rising--diminishing returns

PART 2: What do the graphs look like?TC ATC

NOW: WHAT IS THE COST OF PRODUCING ONE MORE UNIT change cost /change in production vc/mpp go to mpp column and divide that into vc Marginal Costs of producing one more

TPMPPFCAFCVCAVCTCATC MC /6= /9= /11= 3.64

TPMPPFCAFCVCAVCTCATC MC

WHAT ABOUT REVENUE AND PROFIT

Total revenue= Price X quantity sold how can you figure this out

Marginal Revenue Change in revenue How could we figure this?? Mpp/Change in revenue what would be the easy way ???

Profit Difference between total revenue and total costs Remember we want Max Profit What equation expresses where Max Profit is located

Max Profit output is always found at MR=MC