Begino, Vanessa Jamila D.

BMI-A1

GRADED ACTIVITY NO. 3

Topics: Economic Optimization

Instructions: This is a 50-points graded activity. Please make your answers original,
complete, direct and responsive to the questions.

ANSWER:

1. What is optimal decision in connection with effective managerial decision-making

process? 10 pts.)
2. Briefly explain the following terms: (20 pts.)
a. Revenue
b. Price
c. Cost analysis
d. Law of demand
3. Explain the importance of tables, and graphs, charts in data analysis. (10 pts.)

4. Distinguish variable costs from fixed costs. Giver example. (10 pts.)

ANSWERS:

1. The optimal decision helps to improve a manager’s decision making. Also, when
alternative courses of action are available, the optimal decision is the one that
leads to the outcome that best aligns with management objectives. Decision
makers must identify all available options and present them in terms of
reasonable costs and benefits. The application of business management
principles greatly expands the discussion of decision-making alternatives.
Business management also provides tools for analyzing and evaluating decision-
making options.

2. A. Revenue – it is the income received of a business by the quantity of goods

sold or the income received from the services offered.

B. Price – It is the amount of money to be paid in exchange of a product or

services.
 c. Cost Analysis - A cost analysis includes a detailed study of the price and
availability of various products. Input factors, alternative production plans,
production methods, etc.

d. Law of Demand - The law of demand states that the higher the price, the
lower the demand, and the lower the price, the higher the demand. The
relationship between price and quantity demanded is inversely proportional.

3. Tables and graphs are useful tools for organizing data that can be used for
decision making. It is also a convenient means of providing evidence to convince
others of a particular argument. Analyzing and integrating data from various
sources is an important part of reasoning development and decision making.

4. Variable costs are all costs that vary depending on how much a company
produces and sells. In other words, variable costs increase as production
increases and variable costs decrease as production decreases. Some of the
example types of variable costs include labor, utilities, fees, and raw materials.
While Fixed Cost is the cost that do not change with the amount produced.
Example of fixed cost are interest in debt, tax, and rent expense.