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The manager of a firm wants to know what quantity, q, of output she needs to produce in order to maximise profits. To solve this problem, she needs one more cost concept: marginal cost. Marginal cost is how much total costs increase when you produce one more unit of output. The marginal cost of one more unit of output depends on how much output has already been produced. To see this, examine the total costs column of Table 10-1. Notice that total costs increase from 100 in the first row to 180 in the second row as output increases from 0 bottles to 50 bottles when the firm hires the first worker. In other words, costs go up 80 while output goes up 50 bottles. So each of these extra, marginal 50 bottles on average increases costs by 80/50 = 1.60 each. The marginal cost per bottle, MC, is defined as follows: MC = (Change in TC)/(Change in q) (6)



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Once the therapist has ascertained the procedures that the patient is enacting and the reciprocal role patterns that lead to these procedures, then a letter is constructed by the therapist as a hypothesis with which to understand the dif culties The letter is written empathically and aims as much as possible to employ the words and metaphors used by the patient to express her dif culties, in order to ensure an emphasis upon collaboration and empathic understanding The reformulation letter describes the target problems, the problem procedures, and the reciprocal role relationships in such a way as to make clear the understandable links between the patient s past, and possible origin of their procedures, and the way in which the procedures are occurring in the patient s life currently Predictions are also made in the letter as to how the procedures and reciprocal roles will be re-enacted in the therapy.





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ISDA/IIF This ambitious project covered a range of model types It compared 4 commercially available models (Moody s KMV Portfolio Manager, RMG s CreditManager, CSFB s Credit Risk+, and McKinsey s CreditPortfolioView), and 11 other proprietary models Using what was described as a very standardized portfolio, the report indicated that, initially, the capital measures varied substantially across different types of models But once the parameters were harmonized, the study found that capital measures are fairly consistent within the same type of models and expected losses were very much consistent throughout all models While this was a project that added much to knowledge about the models, it was a one-time effort Moreover, because of the way the project was structured, it is not reproducible Academic Several academic papers examining the portfolio models have appeared.

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Goals for change are set out in the letter in terms of recognising and revising the procedures Rather than challenging the patient to give up her disorder outright, an indication of how change might be achieved is offered The letter is concluded with a succinct list of target problems and associated procedures The patient is offered a draft copy of the reformulation letter at sessions 4 6, when it is read aloud to the patient The patient takes away the copy and is encouraged to re-read and change or agree to the reformulation A diagram of the reciprocal roles and procedures is also developed with the patient in the following sessions as a shorthand and more visually accessible version of the reformulation letter This is used in subsequent sessions to name reenactments of the procedures as they occur.

In general, these papers identify the mathematical relation between model types and provide some simulation results using stylized portfolios Lopez and Saidenberg (1998) Jose Lopez and Marc Saidenberg discuss the differences between market risk models and credit risk models that make the validation of credit risk models more dif cult They propose a cross-sectional simulation method to evaluate credit risk models Gordy (2000) Michael Gordy demonstrates that CreditManager and Credit Risk+ both have a similar underlying probabilistic structure, despite the surface differences Gordy shows that both models can be mathematically mapped into each other Gordy also shows that the difference between CreditManager and Credit Risk+ is the result of different distributional assumptions that affect the kurtosis of the loss distribution and therefore affect the economic capital measure Hickman and Koyluoglu (1998) Andrew Hickman and Ugar Koyluoglu examined three different portfolio models CreditManager, Credit Risk+, and CreditPortfolioView.

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