a) What marginal benefits are
Marginal benefits are the satisfaction, profit, advantage gained by acquiring or consuming an additional unit, one more dollar, one more hour.
b) What marginal costs are
Marginal costs are the lost satisfaction, lost profit, the price paid, if you acquire or consume one more hour, one more unit, or one more dollar.
c) the marginal benefits = marginal costs rule of economic decision making.
The fundamental rules of economic decision making is always acquiring or consuming one more unit, one more hour or dollar if and only if the marginal benefit from doing something exceeds the marginal cost of doing so. Moreover, if the marginal cost of acquiring or consuming one more unit, one more hour, or one more dollar exceeds the marginal benefit of acquiring or consuming one more unit, one more dollar, or one more hour, you shouldn’t do it. However, you should continue acquiring and consuming additional marginal units, hours or dollars up to the point where the marginal benefits from the last unit hour or dollar just equals its marginal cost. For example, if the satisfaction you get from eating a third piece of cake as a snack exceeds the value of the $4.00 you have to pay for the piece of cake; he/she should buy and eat the third piece of cake.
2) Define and explain:
a) An individual 's demand curve, a market demand curve and the law of demand
An individual’s demand curve is the curve that shows the marginal benefits, which is measured as the maximum dollar value an individual buyer is willing to pay for one additional unit of something. Of course, the premise is based on the assumption that the individual is ra...
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... formulas (e.g. double declining balance or sum of years digits).
Conversely, economic depreciation in the current period is an avoidable fixed opportunity cost if it is measured as the year to year decline in the market value of an asset, plus the implicit opportunity cost of the return you can gain if you sell the asset and invest the sale proceeds. In addition, if a fixed asset has no resale value in the current period it has no economic depreciation; however, this same asset will often have an accounting depreciation expense associated with it.
Economic depreciation does not effect cash flow; however, taxes and positive cash flow are generated from accounting depreciation. Accounting depreciation also yields a positive cash flow contributions to accounting profits; however, only where business profits are taxed. It does not contribute to economic profits.
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