e303lect7F09

# e303lect7F09 - September 4 2009 Lecture 7 Reading Baye Ch 2...

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September 4, 2009 Reading Baye, Ch 2. pp. 35-45. Lecture 7 Collect HW#2 Wednesday. REVIEW___________________________________________________: I. Chapter 1. The Fundamentals of Managerial Economics B. Components of Effective Decision Making b. Continuous Decisions (review) 2. Comparing MB to MC 0 100 200 300 400 500 600 0 5 6 7 8 9 10 Output TC TB 0 20 40 60 80 100 0 1 2 3 4 5 6 7 8 9 10 Output MB, MC Observe the role of marginals and totals on each graph - b. Continuous Decisions. - Our incremental changes are off just a bit - To calculate the slope of the line tangent to a curve AT A POINT, we take a derivative. That is, to calculate the slope of the line tangent to 10 Q-Q 2 at Q=4, for example, find ] [ ) 4 ( ) 4 ( 10 [ ] 4 ) 4 ( 10 [ lim 2 2 0 Q Q Q Q Q Q - - - + - - - Which reduces to Q Q + 2 lim 0 This is the idea of a derivative MR MC TR MC MR Profit

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Preview__________________________________________________________ b. Continuous decisions 2. Some rules for derivatives 3. Working with EXCEL c. Incremental Decisions Lecture_____________________________________________________________ Comments I assume that you all have been exposed to simple differential calculus. The above development was done only to complete a little intuition pertaining to calculus.
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e303lect7F09 - September 4 2009 Lecture 7 Reading Baye Ch 2...

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