MGCR 293 Lecture Notes - Lecture 18: Dependent And Independent Variables, Partial Derivative

• School: McGill University
• Department: Management Core
• Course: MGCR 293
• Professor: Kamal Salmasi

Document Summary

We always want to maximize net benefits and we use marginal analysis to do so. Marginal value: the change in a dependent variable associated with a one-unit change in an independent variable. Marginal profit: the change in total profit associated with a one-unit change (increase) in output. Graphically marginal profit is always equal to the slope of the tangent to the total profit curve representing different outputs. **** when total profit is maximized your marginal profit is = additional profit; the slope is 0) Zero (there is no more room to make. To maximize our total profit we have to produce (q) up to a point in which: *** marginal values are the slopes of total values. **average profit curve rises if it"s below the marginal profit curve and it falls if it"s above the marginal profit curve. *the average value is maximized (or minimized) when it"s equal to marginal value.