Econ Chapter 18 - Custom Scholars
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# Econ Chapter 18

question
functional relation
Q=f(p)
The number of units sold is a function of price
- Q is a dependent value
- P is an independent value
question
marginal value
the marginal value of a dependent variable is the change in the value of the dependent variable that is associated with 1-unit change in a particular independent variable
question
marginal analysis
a dependent variable is maximized when its marginal value shifts from positive to negative (i.e, 0)
question
net benefits
we always want to maximize net benefits
net benefits = total benefits - total costs
question
marginal decision rule
1. MB > MC, the quantity of activity should be increased
2. MB = MC, the net benefit is maximized
3. MB < MC the quantity activity should be reduced
question
positive and negative relationships between variables
an upward sloping line describes a positive relationship between X and Y
a downward-sloping lime describes a negative relationship between X and Y
question
slopes
- slope of a straight line is constant
- slope is negative if the line is downward sloping
- the slope of a curved line at a specific point is equal to the slope of a straight line that is tangent to the curve at that point
- the average slope of a curved line across an arc is equal to the slope of a straight line that joins the endpoints of the arc
question
Relationship between total marginal and average values
- When total profit is maximized the slope of the total profit function equals zero and marginal profit intersect the horizontal axis (MP=0)
-the average profit curve rises if its is below marginal profit and it falls if it is above the marginal profit curve
- average profit is maximized when it is equal to marginal profit
question
using derivatives to solve max min problems
1. find the value of X such that dY/dX=0 (when that value of X is substituted into dY/dX)
2. find the second derivative of Y with respect to X and substitute in the value of X found in step 1
question
second derivative rules when substituting in X
- If the second derivative is positive Y is maximized
- If its negative then Y is minimized
question
constrained optimization
to optimize a function given a single constraint, imbed the constraint in the function and optimize as previously defined
question
the first derivative of total profit with respect to quantity is
marginal profit
question
a function of one argument is maximized when the first derivative is
is zero and second negative
question
total profit is maximized when
marginal profit equals zero
question
when average profit is increasing with increases in output, marginal profit must be
greater than average profit
question
the slope of a straight line is
constant
question
maximum profit occurs whenever
the slope of the total revenue function equals marginal cost
question
the second deirvative of the total profit function is
the function representing the slope of the marginal profit function
question
average profit is maximized when
average profit is equal to marginal profit
question
whenever average profit is less than marginal profit
average profit increases with increases in output
question
to increase profit if marginal revenue exceeds marginal cost
increase output
1 of 21
question
functional relation
Q=f(p)
The number of units sold is a function of price
- Q is a dependent value
- P is an independent value
question
marginal value
the marginal value of a dependent variable is the change in the value of the dependent variable that is associated with 1-unit change in a particular independent variable
question
marginal analysis
a dependent variable is maximized when its marginal value shifts from positive to negative (i.e, 0)
question
net benefits
we always want to maximize net benefits
net benefits = total benefits - total costs
question
marginal decision rule
1. MB > MC, the quantity of activity should be increased
2. MB = MC, the net benefit is maximized
3. MB < MC the quantity activity should be reduced
question
positive and negative relationships between variables
an upward sloping line describes a positive relationship between X and Y
a downward-sloping lime describes a negative relationship between X and Y
question
slopes
- slope of a straight line is constant
- slope is negative if the line is downward sloping
- the slope of a curved line at a specific point is equal to the slope of a straight line that is tangent to the curve at that point
- the average slope of a curved line across an arc is equal to the slope of a straight line that joins the endpoints of the arc
question
Relationship between total marginal and average values
- When total profit is maximized the slope of the total profit function equals zero and marginal profit intersect the horizontal axis (MP=0)
-the average profit curve rises if its is below marginal profit and it falls if it is above the marginal profit curve
- average profit is maximized when it is equal to marginal profit
question
using derivatives to solve max min problems
1. find the value of X such that dY/dX=0 (when that value of X is substituted into dY/dX)
2. find the second derivative of Y with respect to X and substitute in the value of X found in step 1
question
second derivative rules when substituting in X
- If the second derivative is positive Y is maximized
- If its negative then Y is minimized
question
constrained optimization
to optimize a function given a single constraint, imbed the constraint in the function and optimize as previously defined
question
the first derivative of total profit with respect to quantity is
marginal profit
question
a function of one argument is maximized when the first derivative is
is zero and second negative
question
total profit is maximized when
marginal profit equals zero
question
when average profit is increasing with increases in output, marginal profit must be
greater than average profit
question
the slope of a straight line is
constant
question
maximum profit occurs whenever
the slope of the total revenue function equals marginal cost
question
the second deirvative of the total profit function is
the function representing the slope of the marginal profit function
question
average profit is maximized when
average profit is equal to marginal profit
question
whenever average profit is less than marginal profit
average profit increases with increases in output
question
to increase profit if marginal revenue exceeds marginal cost
increase output

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