Optimal values for decision and outcome variables

Managerial Economics (ECON 3551)

Project Instructions

Choose any five spreadsheet problems (tabs on the spreadsheets in the Course Materials / Lecture Slides folder), except Ch. 2 App. On each spreadsheet,

(1) Identify what the key variables and data are. (2) Analyze the baseline scenario: calculate the optimal values for the decision and outcome variables. (3) Create and analyze a change scenario: discuss a possible change in the data and its effect on the decision and outcome variables.

See the example and details below. The deliverable is a Word or PDF file, submitted through Blackboard.


Sunday, June 10, 11.59 pm

Note: There is no possibility of extension because of the grading deadline two days later.

Example and Details


1. What to do

Here is what you see when you first open the spreadsheet:

The decision variable (Quantity) is colored blue; the target variable (Profit) is colored red.

Identify the “data.” You do this by clicking the green-colored entries and see if there is a formula behind them that contains independent information. In this case, price comes from an assumed demand function:

The demand function is P = 170 – 20*Q, since the cell reference (B7) points to quantity Q. Also, cost comes from an assumed cost function:

The cost function is C = 100 + 38*Q. Some other cells have formulas, but they derive from the demand function (MR) or the cost function (MC), so they are not new information. You have to use your understanding of economics to recognize what they are, and that the information is not new. Alternatively, you could look up the actual spreadsheet problems in the book and see what the data are that are given.

Now you optimize the target variable, probably by using Solver (which I explained in class, and in the Ch. 2 slides). Solver tells you that the optimal quantity is Q0 = 3.3, and the optimal price is P0 = 104. Then, profit is π0 = 118. Make a note of these values.

Next, you choose one of the formulas that contain data and think of a scenario that could affect the data. Let’s say, you pick the demand function, and you imagine that consumer incomes increased, and this is a normal good. Then, the demand function might change to P = 200 – 20*Q. You modify the spreadsheet accordingly. Recognize that, when demand changes, the formula for MR does as well. It becomes P = 200 – 40*Q, and you need to make that modification.

Note that the decision variable will not be at its optimal value anymore, after the change. Run Solver again to reoptimize.

It turns out that the firm’s optimal quantity increases to Q1 = 4.05, the optimal price increases to P0 = 119, and the optimal profit increases to π1 = 228. Again, note down these values.

2. How to report your work

This is how you might show your work in this example. Whichever format you choose to follow, make sure it includes:

– The spreadsheet you’re working on (chapter number and the name of the worksheet tab).

– The primary data that are being assumed (given functions and values). – The decision variable(s) and the target / objective(s). – The initial optimal value(s) of the decision variable(s) and the target / objective(s), as

well as any affected variables that might be of particular interest. – How you are modifying primary data and your justification, i.e. the scenario you are

considering and any further assumptions that may be required, so that it produces a change in that direction.

– The new optimal value(s) of the decision variable(s) and the target / objective(s), as well as important affected variables. Also express any changes in percentages, so that they are on a common scale. E.g. the percent change in profit is 100*(π1 – π0)/ π0.

You do not need to include screen captures.

Ch. 2 (App)

Primary Data:

– Demand function P = 170 – 20*Q – Cost function C = 100 + 38*Q

Key Variables:

– Sales (decision variable) – Profit (target variable)

Baseline Scenario Optimal Values:

– Sales: Q = 3.3 (Price P = 104) – Profit: π = 118

Sensitivity Analysis:

Suppose there is an increase in consumer incomes. I will assume that this is a normal good. Then demand will increase. Specifically, consider an increase in the demand function to P = 200 – 20*Q, which means that consumers are willing to pay $30 more. In this case, the company should increase sales by 23% to 4.05, while raising the price by 11% to $115. This will increase profit by 93% to $228.

Change Scenario Optimal Values:

– Sales: Q = 4.05 (Price P = 115) – Profit: π = 228

3. How I will grade

There are four points per spreadsheet. Two points are for correctly evaluating the baseline scenario (i.e. determining the data and initial optimum); two points are for coming up with a reasonable change scenario and evaluating it (reasonable justification, new optimum). For each scenario (baseline, change) you get 1 point if your answer is basically right, but imprecise or flawed in a minor way (say, you forgot one of the given data in the baseline scenario, or you omitted a necessary assumption in your change scenario). You get 2 points for an answer that is clear, complete, and correct.

Get Professional Assignment Help Cheaply

fast coursework help

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Our essay writers are graduates with diplomas, bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

How It Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.


order custom essay paper
Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
error: Content is protected !!
Open chat
You can contact our live agent via WhatsApp! Via +1 817 953 0426

Feel free to ask questions, clarifications, or discounts available when placing an order.

Order your essay today and save 20% with the discount code VICTORY