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Chapter 7 Economic Principles Choosing Production Levels

Introduction. Economic principles consist of a set of rules, which together ensure that the choice or decision made will result in maximum profitSteps:Acquire physical and biological dataAcquire price dataApply economic decision making rule to maximize profit. Marginalism. Marginal: incremental

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Chapter 7 Economic Principles Choosing Production Levels

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    1. Chapter 7 Economic Principles – Choosing Production Levels

    2. Introduction Economic principles consist of a set of rules, which together ensure that the choice or decision made will result in maximum profit Steps: Acquire physical and biological data Acquire price data Apply economic decision making rule to maximize profit

    3. Marginalism Marginal: incremental changes, increases or decreases, that occur at the edge or the margin May be useful to substitute the word “additional” or “extra” whenever the word marginal is used Ex: You may be interested in how cotton yield changes from using an additional 50# of fertilizer

    4. Marginalism To calculate, it is necessary to find the difference between an original value and the new value that resulted from the change in the controlling factor We will use a small triangle for shorthand meaning “the change in” Ex: corn yield would be read as the change in corn yield and would be the difference in corn yield before and after some change in an input affecting yield

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