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10Spring.Lecture Notes.Math

10Spring.Lecture Notes.Math - • Variables move in the...

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Managerial Economics Managerial Economics (ECON 5203) Dr. David L. May Oklahoma City University
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Math Review Models Mathematical Variables Things that may be quantified Values subject to change Dependent/Independent LHS and RHS Causation and Association Represented by “symbols” W = the weight in pounds of person i 10/22/10 2 Managerial Economics
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Math Review (cont) Functions Y = f (X); the value of the variable Y is a function (depends on) the value of the variable X Linear functions Y = a + bX (note that here, a and b are “parameters” of the linear relationship between Y and X) a is the Y intercept and b is the slope coefficient Graphs Vertical Axis and Horizontal Axis Dependent Variable on Vertical, Independent on Horizontal 10/22/10 3 Managerial Economics
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Math Review (cont) Relationships between Variables Negative (indirect, inverse)
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Unformatted text preview: • Variables move in the opposite directions • Downward-sloping line – Positive (direct) • Variables move in the same direction • Upward sloping line 10/22/10 4 Managerial Economics Math Review (cont) • Optimization – Maximums and Minimums (Max Profits & Min Costs) – Slope at Max/Min = 0 • Max/Min of any function occurs where slope = 0 • Slope = change in one variable relative to another • Derivative = change in one variable relative to another • Marginal = change, additional, next, etc. 10/22/10 5 Managerial Economics Math Review (cont) • Optimization – If π = TR – TC – To Maximize π, the change in π must be 0 – Change in π is called Marginal Profit – To maximize Total Profit, we find where Marginal (change in) Profit is 0 10/22/10 6 Managerial Economics...
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10Spring.Lecture Notes.Math - • Variables move in the...

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