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Unformatted text preview: st derivative). EXAMPLE: Two different payment schemes: Payment Scheme Pay Payment A $100 Payment B 50% of $200 50% of $0 We prefer payment scheme A instead of payment scheme B because B is riskier . The Expected value of A = $100 The Expected value of B = 0.5*(200) + (0.5)*(0) = 100 Those who choose A also have a diminishing marginal utility. People who prefer A experience less utility with each additional dollar they earn. Addition Rule : If f(x) = g(x) + h(x) SUMMARY He just wants us to know how to take derivatives and then use those tools to analyze profits and functions. This is the extent of the calculus we will be doing in this class. HOMEWORK: Read the Calculus Appendix (CA) Complete the rest of the worksheet...
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 Spring '09
 Nonnenmacher
 Utility

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