Revenue, Cost, and Break-Even Note: Make sure macros are enabled;
(Based on Example 2 in the text.) otherwise, the buttons will not work.
In Example 2 of the text, the cost and revenue functions for "Frozenair Refrigerators" were:
C(x) = 500x + 10,000 and R(x) = 1,500x
If you click on the corresponding cells in little the chart below, you will see these same formulas
under C(x) and R(X). Under P(x), we have entered the difference, R(x) - C(x).
x C(x) R(x) P(x)
8 14000 12000 -2000
1. Change the value of x (the number of refrigerators manufactured) to see the effect on profit P(x).
The break-even value of x is the value that results in P(x) = 0. Can you find it by experiment?
A built-in procedure called "Goal Seek" can find the break-even value of x for you.
(Essentially, it uses its own systematic "trial and error" method.)
2. Under Tools, select "Goal Seek…" This will bring up a dialog box:
Set Cell
To Value 0
By Changing Cell
3. Since you want to set P(x) (the contents of cell F21) to zero by changing x (cell C21),
enter F21 as the cell to set, 0 as the value, and C21 as the cell to change.
The desired value of x will then automatically appear in cell C21.
Press here to have the computer carry out these steps:
In the sheet "Equilibrium", you will be asked to use Goal Seek to find an equilibrium price.
Demand, Supply, and Equilibrium Price
(Based on Example 4 in the book.)
The supply and demand equations for Hot 'n Spicy Beans are found to be:
Demand: q(p) = -200p + 500
Supply: q(p) = 800p - 100. (p = price, q = number of cans sold or supplied per week)
The equilibrium price is the price p such that demand = supply.
1. Complete the following table by entering any value for p, and formulas for supply, demand,
and the difference supply - demand.
p Supply Demand Supply-Demand
Press here to have the computer fill in the formulas:
2. Now do a Goal Seek (see the sheet "Break-Even") to make Supply-Demand = 0.
Press here to have the computer find the break-even point:
Press here to clear the answers:
ied per week)