1. Calculating Costs
One of the most important economic concepts
is the idea of marginal. Marginal means the change in, extra, or additional.
Marginal cost is the change in total costs when an added unit of output is
produced. Most managers make marginal cost/marginal revenue decisions every
day. Go to the About Economics website at
http://economics.about.com/cs/studentresources/a/costs.htm and calculate the marginal cost using the data at the bottom of the page.
2. Profit Maximization
As discussed in the text, the profit maximization
rule is to produce the quantity where
MR =
MC. Profit maximization can also be illustrated in different
ways, and the appropriate management decision (mode of operation) will vary
depending on costs and revenues. Read the discussion of profit maximization
on the Wikipedia free encyclopedia website at
http://en.wikipedia.org/wiki/Profit_maximization.
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What two methods can be used to determine
the profit-maximizing level of output?
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What four modes of operation, profit
or loss situations, can occur at the level of output where MR = MC?
