BUS 207 Chapter Notes - Chapter 2: If And Only If, Demand Curve, Marginal Revenue
31 Oct 2017
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2 optimal decisions using marginal analysis (p. 27-54) Marginal analysis = process of considering small changes in decision & determining whether a given change will improve the ultimate objective. Make a (cid:498)small(cid:499) move to a nearby alternative iff move will improve one"s objective. Keep moving in direction of improved objective, stop when no further move will help. If economic conditions change, curve will too. At any given price, quantity sold can be predicted w/ certainty. Demand equation only shows snapshot of current demand. Marginal profit = change in profit resulting from small increase in any managerial decision variable. Marginal revenue = amount of additional revenue that comes w/ unit increase in output & sales.
