Chpt 6 Group Project (2)

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Chapter 6 Group Project Team 9 Chapter 6 Group Project John Jackson, Michael Savage, Gargi Ray, Alexander Schwartz, Mark Gregoire University of Florida ECP5705 Dr. Mark Rush September 18 th , 2022

Chapter 6 Group Project Team 9 Chapter 6 Group Project Our quantities demanded by price are depicted in the graph below. Our R2 is sitting at .91 which we know is a great number to use to make decisions from. This is the best R2 we can arrive at between the various charts using a Polynomial trendline. The R2 is in the bottom right corner of the graph for reference. The Marginal cost was given at $8 dollars but we also understand that if we were to take our change in total cost / change in price we would arrive at the given value of $8 dollars. We can set that number aside initially and multiply our demand by our price to get our total revenue (TR). This is depicted in column D of the inset picture. After figuring out our TR, we were able to determine our change in revenue / change in quantity as depicted as Marginal Revenue (MR) in column E. We then take our given data of Marginal Cost (MC) of $8 dollars and inlay that data. Next, we had to determine our TC and to do so we took our fixed cost (FC) and added that to our MC. We then took that number and multiplied it by our demand to get our total cost (TC).

Chapter 6 Group Project Team 9 Armed with this information we can subtract our total cost from our total revenue and arrive at our profits as shown in column H. In a perfectly competitive market (P = MC). No fixed cost was provided so we assumed our fixed cost (FC) equaled zero (0) to accomplish this. With this we can determine that our equilibrium price is $7.67, and our equilibrium quantity is 140 Pizzas. The difference between the two is the cost. Both quantities for each will remain the same. The goal for the competitive market is to produce all pizzas up to the price of zero to maximize profits. We must remember that there is competition for a like product. In the monopoly market, there is no competition for our goods and services. Therefore, we can take our product produced at the same quantity and move up to the demand curve vertically and then over to our prices set horizontally and arrive at the price a monopoly can charge. As a company in a competitive market, we will want to produce enough pizzas to the price point of zero so that we are not underproducing or over producing pizzas. We learned that in a perfectly competitive market that making pizzas less than the point where MR = MC is unrealized revenue loss and that producing beyond that point costs us more to make and therefore results in a loss where ultimately, we could have to shut down operations, release employees or close altogether. Using marginal analysis, the goal is to maximize profits and in a monopoly we can accomplish this by setting our prices at $13 dollars to maximize profits. We accomplish this by setting profit maximization for our monopoly at the point where marginal revenue exceeds the marginal cost. This point as depicted in the graph below is approximately $13 dollars. This is the point where we have moved up from the MR curve to the point where it

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