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lecture4 - benefits and costs

lecture4 - benefits and costs - Topic 3 Balancing benefits...

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Topic 3: Balancing benefits and costs USC Marshall
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Balancing benefits and costs Principles of optimization – How to maximize or minimize a function How optimization relates to individual choice – When a decision problem is framed right, it almost always comes down to maximizing net benefit (total benefit minus total cost) The concepts of – Marginal benefit and marginal cost USC Marshall – Opportunity cost
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Balancing benefits and costs Example: You need to decide how much time to devote to studying for this course. Assume that we can attach a monetary value to the time/day you devote to the course as follows: Hours Invested 0 1 2 3 4 5 6 7 8 9 Total 0 15 28 39 48 55 60 63 64 63 If you have nothing else to do, how many Benefit hours/day should you study? USC Marshall
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Balancing benefits and costs Example: You need to decide how much time to devote to studying for this course. Assume that we can attach a monetary value to the time/day you devote to the course as follows: Hours Invested 0 1 2 3 4 5 6 7 8 9 Total 0 15 28 39 48 55 60 63 64 63 If you have nothing else to do, how many Benefit hours/day should you study? USC Marshall
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