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20 download_doc-2.php - The shape of N is deduced from the...

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The shape of N is deduced from the B and C Curves which are given info. Chapter 1 I. Marginal Analysis a. Thinking at the margin b. MB=MC c. Instead of thinking about total benefit/total cost, think about marginal d. Goal: to maximize the net benefits e. MB i. The additional benefit received for one more q ii. = MB ΔBΔQ iii. The slope of B when Δq is infinitesimal f. MC i. The additional cost for one more q ii. = MB ΔCΔQ iii. The slope of the cost curve when Δq is infinitesimal g. Why we don’t stop at the last unit (q) where MB>MC i. q is a continuous variable, so there is no q right below q* 1. if you have a discrete case it is okay to stop at the last unit MB>MC ii. On the exam if there is a pint when MB = MC somewhere in the table (in a discrete case), point out that both the unit q below MB = MC and the unit where MB = MC are optimal (ex. Table 1-1 on page 20) II. Revenue a. Revenue = Price * Quantity i. = R pq b. Cost = (1/2)(Quantity) 2 i. = ( ) C 12 q 2
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c. Profit = Revenue – Cost
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20 download_doc-2.php - The shape of N is deduced from the...

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