a presentation on how decisions are made at the margin...10 principles of economics by Gregory MAnkiw..

1. DECISIONS ARE MADE AT THE MARGIN BY : H.N.Sujan kumar Urs & Ankitha

6. Marginal Benefit & Marginal Cost

7. Optimal Level of Activity NB TB TC 1,000 Level of activity 2,000 4,000 3,000 A 0 1,000 600 200 Total benefit and total cost (dollars) Panel A – Total benefit and total cost curves A 0 1,000 600 200 Level of activity Net benefit (dollars) Panel B – Net benefit curve • G 700 • F • • D’ D • • C’ C • • B B’ 2,310 1,085 NB* = $1,225 • f’’ 350 = A* 350 = A* • M 1,225 • c’’ 1,000 • d’’ 600

9. Using Marginal Analysis to Find A* MB > MC MB < MC NB A 0 1,000 600 200 Level of activity Net benefit (dollars) 800 • c’’ • d’’ 100 300 100 500 350 = A* MB = MC • M

11. THANK YOU