How do company’s use Systems
of Equations?
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Page 424 in Textbook

A company’s profits are maximized when marginal revenue = marginal cost. Locate this
point on the graph. What is the quantity produced (600) and the price of the item ($6)
when profits are maximized?
Next Slide

A company’s profits are maximized when marginal revenue = marginal cost. Locate this
point on the graph. What is the quantity produced (600) and the price of the item ($6)
when profits are maximized?
Next Slide

A company’s profits are maximized when marginal revenue = marginal cost. Locate this
point on the graph. What is the quantity produced (600) and the price of the item ($6)
when profits are maximized?
Next Slide

When the average total cost is at a minimum, it should equal the marginal cost. Is this
true for the graph shown? Explain how you know.
Yes. The two graphs intersect at the vertex of the average total cost graph.
Next Slide

When the average total cost is at a minimum, it should equal the marginal cost. Is this
true for the graph shown? Explain how you know.
Yes. The two graphs intersect at the vertex of the average total cost graph.
Next Slide

Notice the vertical line that represents the production quantity at 600 items. It
intersects all four graphs. Locate the point at which this vertical intersects the demand
curve. If the company produces more than 600 items, will the demand for the product
increase or decrease? What do you think?

Notice the vertical line that represents the production quantity at 600 items. It
intersects all four graphs. Locate the point at which this vertical intersects the demand
curve. If the company produces more than 600 items, will the demand for the product
increase or decrease? What do you think?