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Revenue Maximum

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About This Simulation

This two-panel MicroSim demonstrates the relationship between price, quantity demanded, and total revenue.

Left Panel: Demand Curve - Shows the inverse relationship between price and quantity - The shaded rectangle represents total revenue (Price × Quantity) - As price increases, quantity demanded decreases

Right Panel: Revenue Curve - Shows how total revenue varies with price - Revenue = Price × Quantity = Price × (MaxQuantity - Price) - This creates a parabolic curve - Maximum revenue occurs at the midpoint price (Price = 100)

Key Economic Concepts

  1. Revenue Formula: Revenue = Price × Quantity Sold
  2. Demand Relationship: Higher prices lead to lower quantity demanded
  3. Revenue Optimization: There's an optimal price that maximizes total revenue
  4. The Revenue Paradox: Neither the highest nor lowest price generates maximum revenue

Learning Objectives

  • Understand how revenue is calculated
  • Visualize the trade-off between price and quantity
  • Discover that maximum revenue occurs at an intermediate price
  • Connect the demand curve to revenue optimization

Instructions

  1. Move the price slider to adjust the input price
  2. Observe how quantity changes on the left panel (demand curve)
  3. Watch how total revenue changes on the right panel
  4. Find the price that maximizes revenue (hint: it's at the peak of the parabola)
  5. Notice the orange line marking the maximum revenue point