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Managerial Economics - Midterm Study Guide II

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Management Core
MGCR 293
Kamal Salmasi

Short Run vs Long Run EquilibriumNon Durable Goods SRD less elastic than LRD After P increase cannot decrease consumption by a significant amount in SR Graph steeperDurable Goods SRD more elastic than LRDProducts not purchased often more flexibility to defer purchase in SR More ability to change demand in LRInfluences of Price ElasticityLuxuries more elastic than NecessitiesMORE CHOICESMore substitutesMore elastic More narrow the marketMore elasticMORE ELASTICLonger time horizonMore elasticANNEXE 1 OPTIMIZATION TECHNIQUESMarginal Value change in a dependent variable associated with a 1unit change in a particular independent variableDependent variable maximized when Marginal Value shifts from Positive to NegativeAverage ProfitQ Average Profit equals to the slope of the straight line from the origin to point E pt on the total 0profit curve corresponding to output Q0 Slope of any straight line equals to the vertical distance between two points on theline divided by the horizontal distance between themSlope Tacbc Average Profit Total Profit Output QUpward slopePositive relationship between X and yDownward slopeNegative relationship between X and yMarginal Profit slope of the tangent to the Total Profit CurveAP curve Rises when below MP curveFalls when above MP curve When AP fallsMPAPWhen TP maximized Slope of TP0 MV0MP intersects horizontal axis
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