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What is economic optimization?. If there is only one solution to a problem, then, there is no decision problem.If there are alternative solutions, then you have to decide about the ?best" solution.The best (optimal) solution is one that produces the result most consistent with the managerial objec

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## Chapter 2 Optimal Decisions Using Marginal Analysis

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**1. **Chapter 2Optimal Decisions Using Marginal Analysis

**2. **What is economic optimization? If there is only one solution to a problem, then, there is no decision problem.
If there are alternative solutions, then you have to decide about the best solution.
The best (optimal) solution is one that produces the result most consistent with the managerial objectives.

**3. **Economic Optimization Economic optimization is the process of arriving at the best managerial decision.
Managerial economics provides tools for analyzing and evaluating decision alternatives.

**4. **Primary Objective of Management In managerial economics, the primary objective of management is assumed to be
maximizing the value of the firm
Maximize the following equation:

**5. **Total, Average, and Marginal Relations In any mathematical relationship, there is a DEPENDENT VARIABLE and one or more INDEPENDENT VARIABLE(S).
A marginal relation is the change in the dependent variable caused by a one-unit change in an independent variable.

**6. **Total, Average, and Marginal Relations

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