Economics 2182A/B Lecture Notes - Lecture 4: Billy Beane, Marginal Revenue, Profit Maximization
19 Nov 2018
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Lecture 4: chapter 2 market size and wins (con"t) Review: chapter 2 market size and wins: the deductive approach, see what the model predicts and apply that to real life, profit maximization boils down to equating marginal revenue and marginal cost, profit = tr tc. If marginal revenue > marginal cost, it makes sense to sell more. If marginal cost > marginal revenue, you should sell less. In order to maximize profit, you should sell the quantity at which mr = mc. New material: the inductive approach, we look at the data for patterns and see what it tells us. When we have a big population and we are interested in characteristics of that population, it is often impossible (or expensive) to get data on everyone, so we get a sample of that population. With that sample statistic, we are trying to make our best educated guess about our characteristic of interest in the population, our population parameter.
