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Chapter 5 Practice - Chapter 5 Short repetition practice...

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Chapter 5 Short repetition & practice
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Repetition Importance of marginal analysis when comparing benefit & cost of an action Take into account implicit costs Ignore Fixed & Sunk Costs
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Examples Why do all fast food restaurants offer breakfast if lunch meals are their largest source of revenue?
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Practice • John eats dinner at Elegant Elaine's every  Friday evening, and he always leaves a  large tip for his waiter or waitress. But  when John makes business trips, he never  tips more than 10 percent, and often leaves  nothing at all. Explain John's behavior,  including why it is or is not consistent with  the economists' model of human behavior?
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Repetition Businesses seek to maximize profits Short- Run Costs of Production - total, fixed, variable - ATC, AFC, AVC - MC
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Practice
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Calculate TFC, TVC
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