Managerial Economics For Dummies

Chapter 3

Calculus, Optimization, and You

In This Chapter

Determining the best or optimal decision

Following the rules of calculus

Doing your best given constraints

I remember once seeing a quote, “Warning: The internet may contain traces of nuts.” Well, to be truthful, it’s probably a little more than traces. In any case, it is in that spirit that I say, “Warning: This chapter contains traces of calculus.”

Economic theories are frequently presented with graphs. But the relationships described on the graphs can also be presented mathematically — especially when problems involve optimization. Consumers maximizing satisfaction, firms minimizing cost, and firms maximizing profit are examples of topics that can be presented both graphically and mathematically. Because you may not be interested in learning how topics are presented mathematically, throughout the book I present them both ways. Remember, however, that the graphs and math are simply tools — they help you determine the best decision. Therefore, you should think of them as a simplification rather than a burden in the decision-making ...