Marginal Costs and Benefits Marginal analysis is a technique used in microeconomics by which very small changes in specific variables are studied in terms of the effect on related variables and the system as a whole. Marginal costs and benefits are a vital part of economics because they help to provide the relevant measurement of costs and benefits at a specific level of production and consumption (McCain‚ 2008). This is the reason why I’ve chosen this topic for my paper. We use economics
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need to determine if they should make or reject a certain decision by using marginal costs or benefits. Marginal costs refer to the change in cost over the change in quantity while marginal benefits refer to the change in benefits over the change in quantity (“Marginal Costs & Benefits”‚ n.d.). When it comes to a decision in purchasing a home‚ the strength of the economy could affect the marginal costs and the marginal benefits. During the times of economic growth‚ the consumer who purchases a
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Explain how the strength of the economy as a whole could affect the marginal benefits and the marginal costs associated with a decision to purchase a home. How does the removal of the tax deduction on mortgage interest affect the housing market? The strength of the economy as a whole could affect the marginal benefits and the marginal costs associated with a decision to purchase a home. Here’s how. When the economy is growing‚ a consumer may feel that the purchase of a house is a good decision
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Question 1 The primary objective of a for-profit firm is to ___________. Selected Answer: Correct Answer: 5 out of 5 points maximize shareholder value maximize shareholder value Question 2 5 out of 5 points The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers? Selected Answer: Correct Answer: innovation theory of profit innovation theory
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Microeconomics Topic 6: “Be able to explain and calculate average and marginal cost to make production decisions.” Reference: Gregory Mankiw’s Principles of Microeconomics‚ 2nd edition‚ Chapter 13. Long-Run versus Short-Run In order to understand average cost and marginal cost‚ it is first necessary to understand the distinction between the “long run” and the “short run.” Short run: a period of time during which one or more of a firm’s inputs cannot be changed. Long run: a period of time during which
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between revenue and ____. Answer Selected Answer: total economic cost Correct Answer: total economic cost Question 2 5 out of 5 points Recently‚ the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test: Answer Selected Answer: equals the marginal cost of the
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Marginal Analysis A. Marginal Revenue: The increase in revenue generated from the sale of one additional unit of output 1. If there is a positive value associated with the marginal revenue there is an increase in the total revenue. Once the marginal revenue reaches or arrives at 0 then the total revenue is maximized. A decrease or negative in marginal revenue will cause the total revenue to go down. B. Marginal Cost: The additional‚ extra cost involved
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following relationship: Q = 400 – 0.5P where P is price and Q is quantity demanded. Total costs of production (including a “normal” return on owners’ investment) per month are: C = 20‚000 + 50Q + 3Q2 a. Express total profits (() in terms of Q. b. At what level of output are total profits maximized? What price will be charged? What are total profits at this output level? c. What market structure did you assume? Why? d. Would your answers in b change if the
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fact that the number of goods that a firm is manufacturing is in direct connection with the marginal product. Sometimes‚ less is more and less employees using the right equipment and technologies are able to perform much efficient that a greater number of employees that are using old tools in their activity. . As you well said‚ marginal cost and marginal product are strongly connected. When the value of the marginal cost is dropping‚ the value of the marginal product is raising and vice-versa. The
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Marginal and absorption costing Topic list 1 Marginal cost and marginal costing 2 The principles of marginal costing 3 Marginal costing and absorption costing and the calculation of profit 4 Reconciling profits 5 Marginal costing versus absorption costing Syllabus reference D4 (a) D4 (a) D4 (b)‚ (c) D4 (d) D4 (e) Introduction This chapter defines marginal costing and compares it with absorption costing. Whereas absorption costing recognises fixed costs (usually fixed production costs) as
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