e303lect8F09

e303lect8F09 - September 9, 2008 Lecture 8 Reading Baye, Ch...

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September 9, 2008 Reading Baye, Ch 2. pp. 35-45. Lecture 8 Collect HW#2. REVIEW___________________________________________________: I. Chapter 1. The Fundamentals of Managerial Economics B. Components of Effective Decision Making b. Continuous Decisions (review) Preview__________________________________________________________ c. Incremental Decisions Lecture_____________________________________________________________ c. Incremental analysis : For many (if not most) decisions, the manager must make a discrete ‘incremental’ decision rather than select from a set of more or less continuous options. The tools described above remain appropriate in this incremental case. However, rather than considering the entire set of possibilities, consider only the changes from the status quo, and determine whether the incremental change is desirable. The trick to this incremental analysis is to attend only to the things that actually change with the decision, and ignore the rest. One practical way express this is the following:
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This note was uploaded on 04/12/2010 for the course ECON 303 taught by Professor Shrestha during the Fall '08 term at VCU.

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e303lect8F09 - September 9, 2008 Lecture 8 Reading Baye, Ch...

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