
Final Exam A
... the area above the price line and below the demand curve. the consumption of a commodity above and beyond the amount required by the ...
... the area above the price line and below the demand curve. the consumption of a commodity above and beyond the amount required by the ...
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... A problem with the kinked demand curve model is that the firms' beliefs about the demand curve are not always correct and firms can figure out that they are not correct. If marginal cost increases by enough to cause the firm to increase its price and if all firms experience the same increase in marg ...
... A problem with the kinked demand curve model is that the firms' beliefs about the demand curve are not always correct and firms can figure out that they are not correct. If marginal cost increases by enough to cause the firm to increase its price and if all firms experience the same increase in marg ...
Measuring Cost: Which Costs Matter? (pp. 213
... User Cost of Capital = Economic Depreciation + (Interest Rate)Ļ(Value of Capital) See the example of aircraft on pp. 225-6. Why do we need this argument? (Profits, revenue, and costs are all in terms of flow, i.e., per period concepts.) ...
... User Cost of Capital = Economic Depreciation + (Interest Rate)Ļ(Value of Capital) See the example of aircraft on pp. 225-6. Why do we need this argument? (Profits, revenue, and costs are all in terms of flow, i.e., per period concepts.) ...
ge14 Yeaple
... context of heterogeneous labor. As in Yeaple (2005) ex ante identical firms choose among different technologies and this choice affects the nature of their work force. We deviate from this setting in two major ways. First, we assume that there are inherent frictions in the labor market. Second, high fi ...
... context of heterogeneous labor. As in Yeaple (2005) ex ante identical firms choose among different technologies and this choice affects the nature of their work force. We deviate from this setting in two major ways. First, we assume that there are inherent frictions in the labor market. Second, high fi ...
Document
... When demand decreases, the demand left from D3 to D4. curve will shift to the ____ The equilibrium price will ________ decrease from P3 to P4 and the equilibrium quantity will decrease ________ from Q3 to Q4. NMH\s4econ\dsprev2 ...
... When demand decreases, the demand left from D3 to D4. curve will shift to the ____ The equilibrium price will ________ decrease from P3 to P4 and the equilibrium quantity will decrease ________ from Q3 to Q4. NMH\s4econ\dsprev2 ...
No Slide Title
... Putting Demand and Supply Together • Equilibrium – The situation when quantity supplied equals quantity demanded at a particular price – There tends to be no movement of the price of the quantity away from this point unless demand or supply changes. – Equilibrium is a stable point – any point that ...
... Putting Demand and Supply Together • Equilibrium – The situation when quantity supplied equals quantity demanded at a particular price – There tends to be no movement of the price of the quantity away from this point unless demand or supply changes. – Equilibrium is a stable point – any point that ...
Cost Curves for a Firm (pp. 220
... isocost lines with isoquants We choose the output we wish to produce and then determine how to do that at minimum cost Isoquant is the quantity we wish to produce Isocost is a set of combinations of K and L that costs equal each other. ...
... isocost lines with isoquants We choose the output we wish to produce and then determine how to do that at minimum cost Isoquant is the quantity we wish to produce Isocost is a set of combinations of K and L that costs equal each other. ...
Document
... – Shutdown: firm stops producing the good but still pays fixed costs – Exit: firm leaves the industry entirely and no longer faces any costs ...
... – Shutdown: firm stops producing the good but still pays fixed costs – Exit: firm leaves the industry entirely and no longer faces any costs ...
PPT
... A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market? Answer: Solve for P via Qd = Qs 180 – 3P = -50 + 2P yields P = 46 ...
... A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market? Answer: Solve for P via Qd = Qs 180 – 3P = -50 + 2P yields P = 46 ...
Equilibrium: How Supply and Demand Determine Prices Equilibrium
... A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market? Answer: Solve for P via Qd = Qs 180 – 3P = -50 + 2P yields P = 46 ...
... A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market? Answer: Solve for P via Qd = Qs 180 – 3P = -50 + 2P yields P = 46 ...
Production
... Accounting profit is explicit revenue less explicit cost Economists include implicit revenue and cost in determining economic profit Implicit revenue includes the increases in the value of assets owned by the firm; implicit costs include opportunity cost of time and capital provided by owners ...
... Accounting profit is explicit revenue less explicit cost Economists include implicit revenue and cost in determining economic profit Implicit revenue includes the increases in the value of assets owned by the firm; implicit costs include opportunity cost of time and capital provided by owners ...
PROD14f_ING
... The left side of the equation above corresponds to the total aggregate monetary value and the right side to the monetary value of the final demand. Although both methods come up with the same result at an aggregate level, they might nevertheless differ when we try to apply them to a branch or secto ...
... The left side of the equation above corresponds to the total aggregate monetary value and the right side to the monetary value of the final demand. Although both methods come up with the same result at an aggregate level, they might nevertheless differ when we try to apply them to a branch or secto ...
mcq2
... c) More-is-better and diminishing marginal rate of substitution. d) Completeness and more-is-better. Answer: B Difficulty: Med 22. If a firm's production function is Leontief and the wage rate goes up a) the firm must use more labor in order to minimize the cost of producing a given level of output. ...
... c) More-is-better and diminishing marginal rate of substitution. d) Completeness and more-is-better. Answer: B Difficulty: Med 22. If a firm's production function is Leontief and the wage rate goes up a) the firm must use more labor in order to minimize the cost of producing a given level of output. ...
Fall 2003 Final Exam Answers
... Prime Pharmaceuticals has developed a new asthma medicine, for which they have a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. If Prime Pharmaceutica ...
... Prime Pharmaceuticals has developed a new asthma medicine, for which they have a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. If Prime Pharmaceutica ...
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... use of the Postal Service’s Total Factor Productivity (TFP) results (i.e., the TFP index). Rather, it makes use of methods developed to measure capital input for the TFP analysis. That is, the relationship between my analysis and the Postal Service’s TFP analysis is that they share common methods to ...
... use of the Postal Service’s Total Factor Productivity (TFP) results (i.e., the TFP index). Rather, it makes use of methods developed to measure capital input for the TFP analysis. That is, the relationship between my analysis and the Postal Service’s TFP analysis is that they share common methods to ...
Capital and Natural Resource Markets
... The Anatomy of Factor Markets Markets for Land Services and Natural Resources Land consists of all the gifts of nature—natural resources. The market for land as a factor of production is the market for the services of land—the use of land. The price of the services of land is a rental rate. Nonrene ...
... The Anatomy of Factor Markets Markets for Land Services and Natural Resources Land consists of all the gifts of nature—natural resources. The market for land as a factor of production is the market for the services of land—the use of land. The price of the services of land is a rental rate. Nonrene ...
Unit 2: Supply, Demand, and Consumer Choice
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
Unit2Macro - Inflate Your Mind
... Consumer Surplus is the difference in what consumers are willing to pay for the price of the product and what they are actually paying for it in the market. ...
... Consumer Surplus is the difference in what consumers are willing to pay for the price of the product and what they are actually paying for it in the market. ...
AP Macro 1-13 Unit Summary
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
www.gilbertschools.net
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
... Example of Free Market Example of how the free market regulates itself: If consumers want computers and only one company is making them… Other businesses have the INCENTIVE to start making computers to earn PROFIT. This leads to more COMPETITION…. Which means lower prices, better quality, and more ...
Unit2Micro - Inflate Your Mind
... The Effect of a Change in Supply on Equilibrium Price and Quantity When supply increases (a rightward shift of the supply curve) 1. The equilibrium price decreases, and 2. The equilibrium quantity increases. When supply decreases (a leftward shift of the supply curve) 1. The equilibrium price increa ...
... The Effect of a Change in Supply on Equilibrium Price and Quantity When supply increases (a rightward shift of the supply curve) 1. The equilibrium price decreases, and 2. The equilibrium quantity increases. When supply decreases (a leftward shift of the supply curve) 1. The equilibrium price increa ...
PDF
... acknowledged the need for Australia’s acceptance of the rules and guidelines of international trade to which it expects trading partners to adhere to. To bolster the national quarantine system, it indicated that additional funding of A$76 million would be delivered over the proceeding four years and ...
... acknowledged the need for Australia’s acceptance of the rules and guidelines of international trade to which it expects trading partners to adhere to. To bolster the national quarantine system, it indicated that additional funding of A$76 million would be delivered over the proceeding four years and ...
MICROECONOMICS I. "B"
... if the rm is dealing with a short-run uctuation in demand. If the rm regards the demand change as permanent, it will make a long-run response, varying the amounts of all inputs. Increasing costs and decreasing return ...
... if the rm is dealing with a short-run uctuation in demand. If the rm regards the demand change as permanent, it will make a long-run response, varying the amounts of all inputs. Increasing costs and decreasing return ...
Comparative advantage

The theory of comparative advantage is an economic theory about the work gains from trade for individuals, firms, or nations that arise from differences in their factor endowments or technological progress. In an economic model, an agent has a comparative advantage over another in producing a particular good if he can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. One does not compare the monetary costs of production or even the resource costs (labor needed per unit of output) of production. Instead, one must compare the opportunity costs of producing goods across countries. The closely related law or principle of comparative advantage holds that under free trade, an agent will produce more of and consume less of a good for which he has a comparative advantage.David Ricardo developed the classical theory of comparative advantage in 1817 to explain why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in other countries. He demonstrated that if two countries capable of producing two commodities engage in the free market, then each country will increase its overall consumption by exporting the good for which it has a comparative advantage while importing the other good, provided that there exist differences in labor productivity between both countries. Widely regarded as one of the most powerful yet counter-intuitive insights in economics, Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible for much of international trade.