Concavity conditions: Benefit---B greater than 0, B lesser/equal than 0 Cost---C greater than 0, C greater/equal than 0 When Bx lesser than Cx, then additional production will result in increase cost When Bx greater/equal to Cx, then marginal benefit equals to marginal cost Marginal benefit curve will either be flat or decreasing (the enjoyment of eating an ice-cream) Marginal cost curve will either be flat or increasing (the cost of extracting mineral) An example where there is no maximum ---when marginal benefit curve and marginal cost curve become parallel to each other Crossing conditions: as x goes to infinity---Bx goes to 0 or Cx goes to infinity (when both conditions are met, you can reach a solution)
Posted on: Wed, 08 Oct 2014 00:02:56 +0000
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