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Subject: Economics
Semester: 2
Period: 5
Week: 27
School Name:
Teacher’s Name:
Subject: Economics
Grade Level: Grade 11
Week & Period: Week 27, Period V
Date:
Topic: Theory of Cost and Revenue
Sub-topic: Derivation of Cost and Revenue Tables
Instructional Objectives
By the end of the lesson, learners should be able to:
- Construct cost and revenue tables.
- Calculate total, average, and marginal costs and revenues.
- Analyze how cost and revenue figures are derived from data.
Instructional Materials
- Chart showing a sample cost-revenue table
- Printed worksheets with incomplete tables
- Calculator (optional)
- Marker and board
Previous Knowledge
Learners have already been taught the concepts of cost and revenue, including fixed, variable, total, marginal, and average cost.
A – Anticipation (Engagement/Warm-Up)
Motivational Set (5 minutes)
Begin with this question:
“Imagine your business made 0, 1, 2, 3, and 4 items, and each item sells for $100. How would you calculate how much you earned at each stage?”
Let students try to compute the total revenue at each output level. Write on the board:
TR = Price × Quantity
Introduce the day’s focus:
“We will now learn how to build full cost and revenue tables and calculate other values such as marginal cost and average revenue from them.”
B – Building Knowledge (Development)
Teacher’s Explanation (20 minutes)
- Building a Cost Table
Use the following simplified example for step-by-step explanation:
|
Output (Q) |
Fixed Cost (FC) |
Variable Cost (VC) |
Total Cost (TC) |
Average Cost (AC) |
Marginal Cost (MC) |
|
0 |
100 |
0 |
100 |
- |
- |
|
1 |
100 |
50 |
150 |
150 |
50 |
|
2 |
100 |
90 |
190 |
95 |
40 |
|
3 |
100 |
120 |
220 |
73.33 |
30 |
|
4 |
100 |
150 |
250 |
62.5 |
30 |
Explain how each column is calculated:
- TC = FC + VC
- AC = TC ÷ Output
- MC = Change in TC ÷ Change in Output
- Building a Revenue Table
Use this example assuming selling price = $100:
|
Output (Q) |
Price (P) |
Total Revenue (TR) |
Average Revenue (AR) |
Marginal Revenue (MR) |
|
0 |
100 |
0 |
- |
- |
|
1 |
100 |
100 |
100 |
100 |
|
2 |
100 |
200 |
100 |
100 |
|
3 |
100 |
300 |
100 |
100 |
|
4 |
100 |
400 |
100 |
100 |
Explain how:
- TR = Price × Quantity
- AR = TR ÷ Quantity
- MR = Change in TR ÷ Change in Quantity
Class Activity (10 minutes)
Students receive a blank cost and revenue worksheet and are guided to fill in:
- Total cost
- Average cost
- Marginal cost
- Total revenue
- Average revenue
- Marginal revenue
Teacher circulates to assist with calculations.
C – Consolidation (Wrap-Up and Evaluation)
Teacher Summary (3 minutes)
- Cost and revenue tables help a business monitor its expenses and income at different production levels.
- Marginal cost helps determine if producing one more unit is worth the additional expense.
- Average revenue usually equals price in a competitive market.
Assessment (7 minutes)
- Multiple Choice Questions
- What is the formula for calculating total cost?
Fixed cost × variable cost
B. Variable cost – fixed cost
C. Fixed cost + variable cost
D. Price × quantity - If the total cost for 3 units is $220 and the total cost for 2 units is $190, what is the marginal cost of the third unit?
$30
B. $40
C. $220
D. $190 - In a perfectly competitive market, the average revenue is always equal to:
Marginal cost
B. Total cost
C. Price
D. Output
- Short-Answer Questions
- Define marginal revenue and show how it is calculated.
- Complete the following table:
|
Output (Q) |
FC |
VC |
TC |
AC |
MC |
|
0 |
50 |
0 |
|||
|
1 |
50 |
40 |
|||
|
2 |
50 |
70 |
- If a firm sells a product at $80 per unit and produces 3 units, calculate total revenue, average revenue, and marginal revenue.
Assignment
A phone repair business has the following information:
- Fixed cost: $60
- Variable cost per unit: $30
- Price per unit: $100
Complete a table for 5 levels of output showing:
i. Total cost
ii. Average cost
iii. Marginal cost
iv. Total revenue
v. Average revenue
vi. Marginal revenue
Teacher’s Reflection (Questions Only)
- Were students able to accurately complete the cost and revenue tables with minimal guidance?
- Did learners show a clear understanding of how to compute marginal and average values?
- Did the pace of the lesson match the learners' ability to follow each step of the calculations?
- Were students engaged and participative during the table-filling activity?
- Were there any particular steps or concepts that most students struggled with?
- How confident were learners in using formulas independently by the end of the class?
- Were there any learners who stood out in assisting others or asking deeper-level questions?