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Profit Maximization
Source: Council for Economic Education (EconEdLink) | Type: Lesson

In this lesson students solve an optimization problem based on the real-world example of profit maximization. Students analyze a revenue and profit report for Apple, Inc. to explore profits and profit maximization. They view a video to strengthen their understanding of profits and profit-maximizing behavior. Students use an online graphing tool to plot a quadratic total revenue function. They also analyze the graph of a cubic total cost function. Students then construct a profit function based on a total revenue function and total cost function. Finally, students solve for the optimal quantity of output that would maximize profits based on a given profit function. They determine the appropriate critical value by taking the first derivative of the profit function and then verify that this value yields a maximum by applying a second derivative test to the profit function.




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