Pizza

0
1
2
3
4
5

Total m
25

20

15

10

0
0 0.5 1 1.5
 Marginal
Total
(additional)
Chart Title
0 0
10 10 25
6 16
4 20
2 22 20
0 22

15
Total marginal benefit

10

0
1 2 3 4
Column K Column L

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

tle

4 5
Column L
A deep-sea diver can sell each pearl he
retrieves for $20 in the seaside market.
However, each time he dives in search of a
pearl,
it is harder to find than the one he found
before.

The table below describes the cost (in time

and effort) of retrieving each successive
pearl.
At what number of pearls harvested
should the diver stop diving for more
pearls?
 Marginal Marginal Marginal analysis is an
Total cost
Pearls
($)
(additional) (aditional) examination of the
costs benefit ($) additional benefits of an
0 0 0 0 activity compared to the
1 6 6 20 additional costs incurred
2 16 10 20 by that same activity.
3 31 15 20
4 62 31 20
5 100 38 20

Managers should also

Chart Title understand the concept of
opportunity cost. Suppose a
120 manager knows that there
is room in the budget to hire an
100
additional worker. Marginal
80 analysis tells the manager that
an additional factory worker
60 provides net marginal benefit.
This does not necessarily make
40 the hire the right decision.
20

0
0 1 2 3 4 5

Total cost ($)

Marginal (additional) costs
The table shows your total benefits from consuming different quantit
What is the marginal benefit of one more gallon of gas, when you cur

The table shows your total benefits from consuming different quantit
What is the marginal benefit of one more gallon of gas, when you cur

The table shows your total benefits from consuming different quantit
What is the marginal benefit of one more gallon of gas, when you cur

The table shows your total benefits from consuming different quantities o
The price of gasoline is $2.50/gallon.
Given this information, using the principle of Optimization at the Margin,
the optimal number of gallons of gas to consume each week will be:

Gallons/ Marginal Total

Week benefit gallons
0 0 0
5 5 2
10 5 4
14 4 5.6
17 3 6.8
19 2 7.6
20 1 8
21 1 8.4
21 0 8.4
consuming different quantities of gas each week.
gallon of gas, when you currently have 0 gallons?

consuming different quantities of gas each week.

gallon of gas, when you currently have 1 gallons?

consuming different quantities of gas each week.

gallon of gas, when you currently have 2 gallons?

nsuming different quantities of gas each week.

f Optimization at the Margin,

nsume each week will be:
Production possibilities: Based on the table above, what is the opportunity cost to Picnicland of increasin

Hotdogs Burgers
1 1800 0 Production pos
2 1350 450
3 900 Production mix
750
2000
Hotdogs
4 450 975 1800
8 0 1125 1600

1400

1200

1000

800

600 Burgers
400

200

0
0 1 2 3 4

Hotdogs
ost to Picnicland of increasing the production of hotdogs from 450 to 900?

Production possibilities / mix

Hotdogs

2 3 4 5 6 7 8 9

Hotdogs Burgers
 Burger
Hours to Shells Cumulative Cumulative
work [pcs] Cum. [pcs] Shell $ Shell $ King [BK] BK $
$/hour
16
1 9 9 13.5 13.5 10 10
14
2 8 17 12 25.5 10 20
12
3 7 24 10.5 36 10 30
10
4 6 30 9 45 10 40
8
5 5 35 7.5 52.5 10 50
6
6 4 39 6 58.5 10 60
4
7 3 42 4.5 63 10 70
2
0
1 2

S
 Opportunity cost
16
14
12
10
8
6
4
2
0
1 2 3 4 5 6 7

Shell $ Burger King [BK] $/hour

 Guests served
Marginal
# of waiters Cost/Wage Total cost
(Total 100) benefit

1 100 $ 100 $ 50 5
2 100 $ 200 $ 80 30
3 100 $ 300 $ 90 10

Chart Title
12

10

0
1 2

Column F Column G
 Marginal
revenue Marginal cost Marginal
$/guest Cost

5 0 0
5 3.3 3.3 $/guest
5 10 10 $/guest

t Title

2 3

Column G