Using the Buffalo Steak Dinners example: q is in single unitsTo find the total possible revenue:1. Find largest possible value of q.2. Integrate D(q) from 0 to the largest possible value of q.- Set up the integral to integrate D(q) -- what is it?Can use Integrating.xlsHow can we use Integrating.xls to help us integrate D(q) from 0 to optimal quantity?Now, question #5 for Project 1 asks us to determine the consumer surplus that results from the production level when you maximize profit. How? We cannot find it directly.1. Find the optimal quantity when you maximize profit.2. Integrate D(q) from 0 to the optimal quantity.- Set up the integral -- what does the integral represent? What is the integral?- What does the value of the integral represent?- Since D(q) is in dollars per drive and q is in thousands of drives, the value of the integral is in thousands of dollars. Since revenue is in millions of dollars, we need to divide by 1,000 to get the unit to be millions.Total PossibleDemand Function19.300002953.00000018.0)(2 qqqD$0 1000 2000 3000 4000 0$8$16$24$32xf (x )A B a b= =Formula for f (x )Integration IntervalDefinitionComputationPlot Intervaldxxfba)(3. We also know what revenue we can receive from selling the optimal number of units at the optimal unit price.- Revenue was calculated to be in millions of dollars and here we have thousands of dollars, we need to again divide this answer by 1,000.4. Using the answers from #2 and #3, you can now find the consumer surplus.5. You can also find the revenue lost from product not sold.
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