User:Narissarasu
Hi, I'm Narissa, first year student at UBC (Sauder School of Business). I enjoy learning math but never really big fan of Calculus and Differentiation, but I'm excited to be in math 110 and I'm looking forward to finally understand Calculus soon.
Homework 12 Write an essay describing a particular use of calculus in your field of study, or in a field of interest to you.
I'm currently taking both business as well as some economics courses, therefore I thought I might just as well talk about how calculus can be apply in the business decision making since economics, business, and calculus are closely related to each other. Consumers and businesses face decisions such as whether or not to input extra hours at the workplace, buy a new equipment, or even to build an additional production facility daily. That is when a common economic tool known as the marginal analysis can help the business people make their decisions more productively and more efficiently, marginal analysis can also help these business people with making not only the right decision but also the decisions in which they would achieve the greatest benefit when apply, therefore it is very important for both business people and economist to know how to obtain the marginal cost. First of all, what is Marginal cost? marginal cost is the increase or decrease in the total costs of a business company as a result of one more or one less unit of output produced or added into the firm. Determining marginal cost is important in deciding whether or not to vary a rate of production, in another word it is defined as the change in total cost that arises when one extra unit of product is being produced. A sale at a price higher than marginal unit cost will increase the net profit of the manufacturer even though the sales price does not cover average total unit cost; marginal cost is then the lowest amount at which a sale can be made without adding to the loss of producers or subtracting from his or her profits. (The marginal cost diagram can be seen below).
In order to figure out the marginal cost of producing one extra unit of output or what is the marginal cost of hiring one extra unit of employee or what is the marginal benefit of opening an extra unit of company? Business people as well as economist are often time more concern with the cost arise from the extra unit of the product or output, since this would provide them with a more accurate detail analysis of whether the company as a whole will benefit from taking the action. Marginal cost is derived from the derivative of the total cost. For example, given the total cost equation of as seen in the below diagram.
To find the marginal cost for example at 100 items, we need to do a derivative of , the result we can conclude that the marginal cost for producing the 101th unit of output will cost $46 dollars. When the marginal benefit of the production is higher than the marginal cost this will then mean it would cost less for the company to produce, whereas if the marginal benefit is lower than the marginal cost, this means that the company will be making a loss of producing each extra unit of output since the firm will be paying higher than they receive. The decision for the business people will then be, the company will only produce if and only if the marginal benefit is greater or equal to the marginal cost of the production.
