question

functional relation

answer

Q=f(p)

The number of units sold is a function of price

- Q is a dependent value

- P is an independent value

The number of units sold is a function of price

- Q is a dependent value

- P is an independent value

question

marginal value

answer

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

answer

a dependent variable is maximized when its marginal value shifts from positive to negative (i.e, 0)

question

net benefits

answer

we always want to maximize net benefits

net benefits = total benefits - total costs

net benefits = total benefits - total costs

question

marginal decision rule

answer

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

2. MB = MC, the net benefit is maximized

3. MB < MC the quantity activity should be reduced

question

positive and negative relationships between variables

answer

an upward sloping line describes a positive relationship between X and Y

a downward-sloping lime describes a negative relationship between X and Y

a downward-sloping lime describes a negative relationship between X and Y

question

slopes

answer

- 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

- 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

answer

- 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

-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

answer

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

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

answer

- If the second derivative is positive Y is maximized

- If its negative then Y is minimized

- If its negative then Y is minimized

question

constrained optimization

answer

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

answer

marginal profit

question

a function of one argument is maximized when the first derivative is

answer

is zero and second negative

question

total profit is maximized when

answer

marginal profit equals zero

question

when average profit is increasing with increases in output, marginal profit must be

answer

greater than average profit

question

the slope of a straight line is

answer

constant

question

maximum profit occurs whenever

answer

the slope of the total revenue function equals marginal cost

question

the second deirvative of the total profit function is

answer

the function representing the slope of the marginal profit function

question

average profit is maximized when

answer

average profit is equal to marginal profit

question

whenever average profit is less than marginal profit

answer

average profit increases with increases in output

question

to increase profit if marginal revenue exceeds marginal cost

answer

increase output

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