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【正文】 l for which MB exceeds MC Managerial Economics 313 Irrelevance of Sunk, Fixed, amp。 Average Costs ? Sunk costs ? Previously paid amp。 cannot be recovered ? Fixed costs ? Constant amp。 must be paid no matter the level of activity ? Average (or unit) costs ? Computed by dividing total cost by the number of units of the activity ? These costs do not affect marginal cost amp。 are irrelevant for optimal decisions Managerial Economics 314 Constrained Optimization ? The ratio MB/P represents the additional benefit per additional dollar spent on the activity ? Ratios of marginal benefits to prices of various activities are used to allocate a fixed number of dollars among activities Managerial Economics 315 Constrained Optimization ? To maximize or minimize an objective function subject to a constraint ? Ratios of the marginal benefit to price must be equal for all activities ? Constraint must be met A B ZA B ZM B M B M B...P P P? ? ?
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