* Reading Outline, Sec4.4 * ---------------------------------------- * Vocabulary/Definitions * - Fixed costs - Economy of scale - Revenue - Profit, as a function of revenue and cost - Marginal cost and marginal revenue, as average rates of change - Marginal cost and marginal revenue, as derivatives - Why maximum profit occurs when MR = MC * Understand * 1. If the revenue of a business, R as a function of the quantity of items produced, q, is R(q) = 7.31 q, what is the marginal revenue? 2. Suppose that the cost and revenue functions for a business are C(q) = 2.5 q^3 + 2 and R(q) = 15 q. At what value of q, the quantity of items produced, is the profit maximized?