BUS 207 Chapter Notes - Chapter 2: Marginal Revenue
30 Jan 2012
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The firm can maximize its total profit by separately maximizing the profit derived from each of its product lines. All other factors held constant, the higher the unit price of a good, the fewer number of units demanded by consumers and consequently sold by firms. The law of demand operates at several levels. The firm uses the demand curve as the basis for predicting the revenue consequences of alternative output and pricing policies. Managerial economics chapter 2: optimal decisions using marginal analysis. Marginal analysis is the process of considering small changes in a decision and determining whether a given change will improve the ultimate objective. Make a small move to a nearby alternative if and only if the move will improve one s objective. Keep moving, always in the direction of an improved objective and stop when no further move will help. A firm produces a single good or service for a single market with the objective of maximizing profit.
