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AC55, Unit 2 Marginal Analysis

The document outlines the concept of marginal analysis in managerial economics, focusing on how small changes in decisions can impact overall objectives. It discusses the relationships between revenue, cost, and profit, and introduces key equations such as the law of demand and profit equations. Additionally, it highlights methods for finding optimal performance through enumeration and differential calculus.

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2 views

AC55, Unit 2 Marginal Analysis

The document outlines the concept of marginal analysis in managerial economics, focusing on how small changes in decisions can impact overall objectives. It discusses the relationships between revenue, cost, and profit, and introduces key equations such as the law of demand and profit equations. Additionally, it highlights methods for finding optimal performance through enumeration and differential calculus.

Uploaded by

s.sullano.krishelleheart
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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n a g e r ia l E c o n o m ic s

AC 55 Ma

MAR G IN A L
AN A L Y S IS
s ,Ma n a ge rial Economics
e: Samuels on and M a rk
Referenc
Hola!
Course Outline:
What is Marginal Analysis?
Revenue, Cost and Profit
Marginal Profit, Marginal Revenue, Marginal Cost
But first,

How do you feel


today?
What is marginal analysis?

the process of considering


small changes in a decision
and determining whether a
given change will improve
the ultimate objective.

In determining the optimal


option, move from one
option to another only when
such option has a positive
change or positive marginal
amount.
What is the essence of this
equation?

R = (P)(Q)
The analysis of revenue
relies so much on a basic
model in economics =
law of demand
What does the law of
demand say?
In the
context of
our lesson,
what does
this graph
tell us
about?
Q = a - bP
Q = a - bP
You can rearrange this formula
and come up with the price (P)
equation
Please present the new
revenue equation using
the quantity/price
equation based on the
demand curve.
What is the
COST EQUATION?
Please present the
PROFIT EQUATION using
the quantity/price
equation based on the
demand curve.
Marginal
Analysis
Please illustrate the
concept of marginal
profit and optimal
output through a table.
There are many ways of
finding optimal
performance via
marginal analysis. One
is ENUMERATION.
There are many ways of finding
optimal performance via marginal
analysis. One is ENUMERATION.

An easier way, though, is


through finding the
derivative of the profit
equation.
Using the basic concepts of
differential calculus, find the
derivative of a sample profit
equation. How do you think will
this help us identify the optimal
level of output to achieve the
highest possible profit or a
marginal profit of zero (0)?
Optimal output can also be
computed by this relationship

M = MR - MC

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