You may want to supply more direction and help.
For instance, the basic economic functions employed in this model are:
A given supplyfunction S(x) that gives the number of units sold at a given price x.
Income I(x) = price x number = x S(x)
Expenses E(x) = (cost per unit) x number + (standing charges) = C S(x) + R (C for costs, R for rent)
Profit P(x) = Income - Expenses = I(x) - E(x).
You may also wish to supply the students with ready-made Supply functions to try. Negative quadratic functions or cubic funtions for instance. A nice cubic function to try is S(x) = (GAN - MP^3)(x - MP)^3 where GAN and MP are the y- and x-axis intercepts.
The concept of [i]sensitivity [/i]is important. What parameter is your optimal price / maximum profits most sensitive to, i.e. what do you have to monitor closely when you set up your business?
Finally you may wish to let your students work out the answer with algebra and calculus, and also critisize the model for it's shortcomings.
