SlideServe
Télécharger Obtenir Pro
Menu
Accueil Pro
Préférences
ApparenceLight Aide et commentaires
© SlideServe · v2026

The Rules of Decision Making

fairfax avatar
fairfax
7 diapositives · 392 Views · May 26, 2012

The Rules of Decision Making . Marginal Analysis . Opportunity Costs. Because our resources are scarce every decision that we make entails an opportunity cost Opportunity costs are not always obvious Explicit costs: costs requiring actual payments

#resolution #judgment #judgement #jury trial #settlement #reject #precedent #closure
The Rules of Decision Making - slide 1
01 / 7The Rules of Decision Making
1 / 17

Télécharger la présentation

The Rules of Decision Making
Une image / un lien ci-dessous est fourni (tel quel) pour télécharger la présentation

Politique de téléchargement : le contenu du site vous est fourni TEL QUEL pour votre information et votre usage personnel ; il ne peut être vendu, concédé sous licence ni partagé sur d’autres sites sans l’accord de son auteur.Le contenu vous est fourni TEL QUEL, pour votre information et votre usage personnel uniquement. Téléchargez la présentation en cliquant sur ce lien. Lors du téléchargement, si vous ne parvenez pas à télécharger une présentation, l’éditeur a peut-être supprimé le fichier de son serveur.Pendant le téléchargement, si vous ne parvenez pas à obtenir une présentation, le fichier a peut-être été supprimé par l’éditeur.

F I N

Plus de contenu associé

Transcription de la présentation

  1. The Rules of Decision Making Marginal Analysis

  2. Opportunity Costs • Because our resources are scarce every decision that we make entails an opportunity cost • Opportunity costs are not always obvious • Explicit costs: costs requiring actual payments • Implicit costs: foregone benefits of (already owned) resources consumed or used in production of a good or service • Implicit cost of capital • Implicit cost of labor • Implicit cost of goods (already owned) • Sunk Costs: Already incurred costs that cannot be recovered and, thus, our decisions will have no effect on

  3. Accounting Profit vs. Economic Profit • Accounting Profit = Total Revenue - Total Explicit Costs • Economic Profit = Total Revenue – Total Explicit Costs - Implicit Costs • Accounting profits tend to overstate profits; when implicit costs are not accounted for a reported business profit is an exaggerated measure of profit • When there are implicit costs “accounting profit” is greater than “business profit” • When a firm’s accounting profit is equal to its implicit costs its “economic profit” is zero and its accounting profit is considered “normal profit”

  4. Making Decisions at the Margin • Most of our decisions are made following our “marginal analysis” of costs and benefits • To achieve a given outcome we often have to make a choice from among alternative means; we normally try to make the “least costly” choice among the available means • Some times our decisions result in benefits as well as costs; • How much food should you buy? • How many years of schooling should you have? • How many hours should you work? • How many workers should you hire? • How much should save/invest?

  5. Marginal Costs vs Marginal Benefits • Decreasing returns and increasing marginal costs: Hours worked Total Output M.OutputM.Cost 0 0 0 1 10 10 2 2 18 8 2.50 3 24 6 3.33 4 28 4 5 5 30 2 10

  6. Marginal Costs vs Marginal Benefits • Decreasing returns and increasing marginal costs: Hours worked M.Cost T.Benefit M.Benefit 0 0 0 1 2 20 20 2 2.50 27 7 3 3.33 32 5 4 5 37 5 5 10 36 1

  7. The Optimal Choice MC $ 5 MB Q 0 QO= 4