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Subject: Economics
Semester: 2
Period: 5
Week: 29
School Name:
Teacher’s Name:
Subject: Economics
Grade Level: Grade 11
Week & Period: Week 29, Period V
Date:
Topic: Theory of Cost and Revenue
Sub-topic: Calculations of Cost and Revenue
Instructional Objectives
By the end of the lesson, learners should be able to:
- Use formulas to calculate total, average, and marginal cost and revenue.
- Solve simple numerical problems involving cost and revenue.
- Analyze business decisions based on cost and revenue figures.
Instructional Materials
- Calculator (where available)
- Whiteboard and marker
- Chart of key cost and revenue formulas
- Printed worksheets with word problems
- Previously completed tables from Week 27
Previous Knowledge
Students have already plotted cost and revenue curves and are familiar with the formulas and components of cost and revenue tables.
A – Anticipation (Engagement/Warm-Up)
Motivational Set (5 minutes)
Begin with this business scenario:
“A soap maker sells each bar for $200. He pays $1,000 for ingredients per day and $3,000 for rent monthly. How can he know whether he’s making a profit or not?”
Ask students:
- What is his fixed cost?
- What is his variable cost?
- What is his revenue if he sells 10 bars?
Let learners attempt mental calculations. Use this to transition into the lesson on practical calculations of cost and revenue.
B – Building Knowledge (Development)
Teacher’s Explanation (20 minutes)
- Important Formulas Recap
- Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC)
- Average Cost (AC) = TC ÷ Output
- Marginal Cost (MC) = Change in TC ÷ Change in Output
- Total Revenue (TR) = Price × Output
- Average Revenue (AR) = TR ÷ Output
- Marginal Revenue (MR) = Change in TR ÷ Change in Output
- Profit = TR – TC
Write the formulas on the board and review with examples.
- Sample Problem Solving
Example 1:
A factory has a fixed cost of $500 and variable costs of $100 per unit. If 5 units are produced:
- VC = 5 × 100 = $500
- TC = FC + VC = 500 + 500 = $1,000
- AC = TC ÷ 5 = $200
- If price per unit is $250, TR = 5 × 250 = $1,250
- Profit = TR – TC = $250
Example 2 (Marginal Cost):
If TC for 4 units is $800 and for 5 units is $1,000:
- MC = (1000 – 800) ÷ (5 – 4) = $200
Class Activity (10 minutes)
Learners receive worksheets containing 3 business scenarios. Each group calculates:
- TC, AC, MC
- TR, AR, MR
- Profit
Teacher moves around to assist and ensure formulas are being applied correctly.
C – Consolidation (Wrap-Up and Evaluation)
Teacher Summary (3 minutes)
- Calculating cost and revenue allows businesses to monitor performance.
- Marginal and average values are useful for setting production levels.
- Profit is earned when revenue is greater than cost.
Assessment (7 minutes)
- Multiple Choice Questions
- What is the formula for calculating average cost?
FC + VC
B. TR ÷ Output
C. TC ÷ Output
D. MR × Output - A firm sells each product at $300 and sells 4 units. What is the total revenue?
$600
B. $1,200
C. $900
D. $700 - A firm’s total cost rises from $1,000 to $1,300 when output increases from 5 to 6 units. What is marginal cost?
$100
B. $300
C. $250
D. $150
- Short-Answer Questions
- A factory has a fixed cost of $500 and a variable cost of $200 per unit. Calculate the total and average cost of producing 4 units.
- If a company earns $2,000 from selling 10 items, what is its average revenue?
- Given:
- FC = $1,000
- Output = 3 units
- TR = $2,400
- VC = $600
Calculate:
i. Total Cost
ii. Profit
iii. Marginal Revenue (assume previous TR was $1,800 for 2 units)
Assignment
An entrepreneur has a fixed cost of $800. He produces 5 units with a variable cost of $150 per unit.
Selling price per unit is $300.
i. Calculate:
- Total Cost
- Total Revenue
- Average Cost
- Average Revenue
- Profit
ii. State whether he should increase, reduce, or maintain output if his marginal cost rises to $280 while price remains constant at $300. Explain your answer.
Teacher’s Reflection (Questions Only)
- Were learners able to accurately apply the formulas during classwork without heavy prompting?
- Did students clearly understand the relationship between TC, VC, and FC?
- Were students confident in identifying the right formulas for each type of cost or revenue?
- Did learners make calculation errors due to misunderstanding or simple arithmetic mistakes?
- Did group discussions improve the speed and accuracy of learners’ responses?
- Were students able to interpret profit or loss outcomes from given data?
- Were the slower learners able to follow through with peer or teacher support?