Using dilute silver erbium alloys as a paramagnetic temperature sensor in metallic magnetic calorimeters (MMCs) has the advantage of the host material not having a nuclear quadrupole moment, in contrast to the alternative of using gold erbium alloys. We present numerical calculations of the specific heat and magnetization of Ag:Er, which are necessary for designing and optimizing MMCs using this type of alloy as sensor material. The parameter ranges we consider are temperatures between 1mK and 1K, external magnetic fields of up to 20mT, and erbium concentrations of up to 2000ppm. The system is dominated by an interplay of crystal field effects, Zeeman splitting, and the RKKY interaction between erbium ions, with certain specific constellations of erbium ions having noticeable effects on the specific heat. Increasing the external magnetic field or assuming a decreased strength of the RKKY interaction leads to a higher magnetization and a narrowing of the main Schottky peak, while changes in the erbium concentration can be well described by parameter scaling.