Question

DISCUSSION- PRODUCTION THEORY

First, the idea that firms (and individuals) should make decisions on how they optimize "on the margin" (where MC=MR). Often people get confused and think about making decisions based on the average (such as average total cost). Average total cost includes FIXED costs, which are sunk and should not influence future decisions.

Second, the idea of diminishing marginal returns. That's the idea that each additional unit provides less benefit than the previous unit consumed.

Use these concepts to explain one action you did ONLY to where MR=MC and not to your true "100% best ability.”

For example:

You did not study Economics for 100 hours this week because the Marginal Benefit of the 100th hour was less than the incremental knowledge you might have gained using the 100th hour elsewhere, such as studying Chemistry. As a result, you used some of your time doing something other than economics.

Edit: I'm not asking for an example of a pure trade off. I do not want a I didn't work so I could spend time with my family.   While that is true, and related, that is not what I am asking. I am trying to make sure you recognize the concept of MARGINAL. Why didn't you do some activity to the literal best of your ability? For example, I spent hundreds of hours preparing this class, but I did not spend 24 hours a day. No matter how many hours I spent, I could have done one more. So why didn't I? At some point, the added hour would have produced such a small difference in the outcome that it would not have been worth the relative cost. Name one thing you did not do to your literal absolute best.

Answer 1

There are two reasons. 1 because it is quite difficult to find mc and MR so I can't find optimal quantity. So I do not optimise. The other reason is it makes minor difference to output by working one more hour. These are reasons why I do not do activity till mr=Mc

One activity that I do is to answer questions. I often equate mc with MR in this matters. The reason is working more produce little addition in output but till then I feel so exhausted that I can't continue.