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Some Cost Considerations for Managers
* Three guidelines for estimating the marginal cost(MC): 1) Average variable cost should not be used as substitute for the marginal cost(MC).
2) A single item on firm's accounting ledger can have two components, only one of which involves marginal cost(MC).
3) All opportunity cost should be included in determining the marginal cost(MC).
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Andrew has preference given by: u(x,y) = min{2x, 3y} The price for good x and good y are identical and equal to 4. At his optimal consumption bundle he achieves a utility of 90. W
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