
entry
... The output decision for a competitive firm: To maximize profit, produce the output level for which: MR = MC (that is, p = MC) . . . unless p < AVC. In that case, shut-down (produce zero output) for the short-run. If AVC < p < ATC, continue to produce in short-run, but exit in long-run if market cond ...
... The output decision for a competitive firm: To maximize profit, produce the output level for which: MR = MC (that is, p = MC) . . . unless p < AVC. In that case, shut-down (produce zero output) for the short-run. If AVC < p < ATC, continue to produce in short-run, but exit in long-run if market cond ...
A professor hires two aides, assigning them the tasks of reading
... the gap in earnings between skilled and unskilled workers over time? (A) An increase in the demand for unskilled workers relative to skilled workers (B) An increase in the supply of skilled workers relative to unskilled workers (C) A decrease in the demand for unskilled workers relative to skilled w ...
... the gap in earnings between skilled and unskilled workers over time? (A) An increase in the demand for unskilled workers relative to skilled workers (B) An increase in the supply of skilled workers relative to unskilled workers (C) A decrease in the demand for unskilled workers relative to skilled w ...
Model
... Basic Models of International Trade 1. Comparative advantage (Ricardo, Heckscher-Ohlin) 2. Economies of Scale (Krugman) 3. Reciprocal Dumping (Brander) Trade Models Based on Economies of Scale • may explain why we observe a lot of intra-industry trade between (rich) countries with similar technology ...
... Basic Models of International Trade 1. Comparative advantage (Ricardo, Heckscher-Ohlin) 2. Economies of Scale (Krugman) 3. Reciprocal Dumping (Brander) Trade Models Based on Economies of Scale • may explain why we observe a lot of intra-industry trade between (rich) countries with similar technology ...
Numerical - RN Institute
... (ii) How much of Good-1 can the consumer consume if she spends her entire income on that good? (iii) How much of Good-2 can she consume if she spends her entire income on that good? (iv) What is the slope of the budget line? 46. Consider the demand curve D(p)= 10-3p. What is the elasticity at price ...
... (ii) How much of Good-1 can the consumer consume if she spends her entire income on that good? (iii) How much of Good-2 can she consume if she spends her entire income on that good? (iv) What is the slope of the budget line? 46. Consider the demand curve D(p)= 10-3p. What is the elasticity at price ...
Economics 160
... 2b. Diminishing marginal returns: As a firm adds equal amounts of one input, holding other inputs and technology constant, then beyond some point output may rise but at slower and slower rate. No, it does not set in right away—initially MP rises, but past 3 units of labor is starts to fall. MP might ...
... 2b. Diminishing marginal returns: As a firm adds equal amounts of one input, holding other inputs and technology constant, then beyond some point output may rise but at slower and slower rate. No, it does not set in right away—initially MP rises, but past 3 units of labor is starts to fall. MP might ...
Answers to Even Problems for Waldman/Jensen
... tax is placed on the monopolist manufacturer, it increases marginal cost from MC to MCtax, where MCtax=MC+$1.00, but the demand curve and MR curves remain at D and MR. The result is that quantity declines to qtax and price increases from P to Ptax. If the tax is placed on the competitive retailers, ...
... tax is placed on the monopolist manufacturer, it increases marginal cost from MC to MCtax, where MCtax=MC+$1.00, but the demand curve and MR curves remain at D and MR. The result is that quantity declines to qtax and price increases from P to Ptax. If the tax is placed on the competitive retailers, ...
Document
... As the price of a good or service increases quantity demanded decreases ceteris paribus vice versa. – what law? Demand is when consumers are ________ and ______ to buy a good or service A table showing the relationship between the price of a product and the quantity purchased A curve showing the rel ...
... As the price of a good or service increases quantity demanded decreases ceteris paribus vice versa. – what law? Demand is when consumers are ________ and ______ to buy a good or service A table showing the relationship between the price of a product and the quantity purchased A curve showing the rel ...
The supply and demand for productive resources
... • If CPA wages increase from P1 to P2, the short-run response will be an increase in CPA services from Q1 to Q2. Some CPAs work more and some come out of retirement. P2 • Given time, supply of the resource (CPAs) becomes more elastic. ...
... • If CPA wages increase from P1 to P2, the short-run response will be an increase in CPA services from Q1 to Q2. Some CPAs work more and some come out of retirement. P2 • Given time, supply of the resource (CPAs) becomes more elastic. ...
Exam 3 test and key
... 19. (Repeat your answer on Scantron line 42.) The numbers in the table represent current prices of four goods in two different nations, Rahrah and Goofonia. Each price is expressed in the local currency of that country, which is the "rah" in Rahrah and the "goofus" in Goofonia. These two countries ...
... 19. (Repeat your answer on Scantron line 42.) The numbers in the table represent current prices of four goods in two different nations, Rahrah and Goofonia. Each price is expressed in the local currency of that country, which is the "rah" in Rahrah and the "goofus" in Goofonia. These two countries ...
Ch 5 Supply Powerpoint - Liberty Union High School District
... 1. What are diminishing marginal returns of labor? (a) some workers increase output but others have the opposite effect (b) additional workers increase total output but at a decreasing rate ...
... 1. What are diminishing marginal returns of labor? (a) some workers increase output but others have the opposite effect (b) additional workers increase total output but at a decreasing rate ...
Inelastic Supply
... The diagram to your left indicates a good which has an inelastic supply curve. It is possible, for example, to grow tomatoes all year round. To grow tomatoes in winter requires glass houses, heating, and supplementary lighting in the right wave lengths, to compensate for the shorter days and longer ...
... The diagram to your left indicates a good which has an inelastic supply curve. It is possible, for example, to grow tomatoes all year round. To grow tomatoes in winter requires glass houses, heating, and supplementary lighting in the right wave lengths, to compensate for the shorter days and longer ...
Study Guide for Exam..
... profit-maximizing perfectly competitive firm change their output? They will increase production from 65 to 75. 21. Refer to the graph above. If the market price equals $60, what will this firm’s revenue equal? What will their profits equal? Their revenue will equal $60*75=$4500. We can’t calculate ...
... profit-maximizing perfectly competitive firm change their output? They will increase production from 65 to 75. 21. Refer to the graph above. If the market price equals $60, what will this firm’s revenue equal? What will their profits equal? Their revenue will equal $60*75=$4500. We can’t calculate ...
İMTAHAN SUALLARI Fənn: MICRO-ECONOMICS Müəllim: Aynur
... 26. Show and explain on graph the identity of tax on buyers and tax on sellers. 27. What is the relationship between elasticity and tax incidence? When does tax burden falls mainly on buyer; on sellers? Explain. 28. In order to reduce air pollution government decide to decrease the use of gasoline. ...
... 26. Show and explain on graph the identity of tax on buyers and tax on sellers. 27. What is the relationship between elasticity and tax incidence? When does tax burden falls mainly on buyer; on sellers? Explain. 28. In order to reduce air pollution government decide to decrease the use of gasoline. ...
Principles of Macroeconomics
... Equilibrium price determined by Home’s Import Demand and Foreign’s Export Supply Curves. ...
... Equilibrium price determined by Home’s Import Demand and Foreign’s Export Supply Curves. ...
1st Midterm F11
... b. Suppose that together they are producing 10 pretzels efficiently, how much cider will they be producing? Show this point on your PPF and label it X. What will each person be producing at point X? Be precise. c. Kyle threatens to quit working because he does not think that he is making the best us ...
... b. Suppose that together they are producing 10 pretzels efficiently, how much cider will they be producing? Show this point on your PPF and label it X. What will each person be producing at point X? Be precise. c. Kyle threatens to quit working because he does not think that he is making the best us ...
Introduction to Microeconomics - MyExcelsior
... able to demonstrate the following learning outcomes: 1. Demonstrate a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers within the larger economic system. 2. State the nature and functions of product market ...
... able to demonstrate the following learning outcomes: 1. Demonstrate a thorough understanding of the principles of economics that apply to the functions of individual decision makers, both consumers and producers within the larger economic system. 2. State the nature and functions of product market ...
Test Information Guide: College-Level Examination Program° 2012-13
... The Principles of Microeconomics examination covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics. This aspect of economics deals with the principles of economics that apply to the analysis of the behavior of individual consumers and businesses ...
... The Principles of Microeconomics examination covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics. This aspect of economics deals with the principles of economics that apply to the analysis of the behavior of individual consumers and businesses ...
Optimal Trade Policy: Home Market Effect vs Terms of Trade
... the sector for which it has a relatively larger domestic demand. This is what is usually referred to as the home market effect. As shown first in Krugman (1980) and discussed more in detail by Davis (1998), in a special case where one sector is characterized by monopolistic competition and transport ...
... the sector for which it has a relatively larger domestic demand. This is what is usually referred to as the home market effect. As shown first in Krugman (1980) and discussed more in detail by Davis (1998), in a special case where one sector is characterized by monopolistic competition and transport ...
MRP - McGraw Hill Higher Education
... Define and analyze derived demand. Define and measure productivity. Discuss and measure marginal revenue product. Discuss changes in resource demand and list the four reasons for these changes. Differentiate between the substitution effect and output ...
... Define and analyze derived demand. Define and measure productivity. Discuss and measure marginal revenue product. Discuss changes in resource demand and list the four reasons for these changes. Differentiate between the substitution effect and output ...
If marginal cost is rising
... relationships between output and various cost measures. The marginal cost per unit when increasing output from 14 to 17 units is A) $20. B) $30. C) $380. D) None of the above answers is correct. 19. When marginal cost is greater than average total cost, the A) marginal cost decreases as output incre ...
... relationships between output and various cost measures. The marginal cost per unit when increasing output from 14 to 17 units is A) $20. B) $30. C) $380. D) None of the above answers is correct. 19. When marginal cost is greater than average total cost, the A) marginal cost decreases as output incre ...
MICROECONOMICS CHAPTER 1 The Market Economy What is to be done?
... Economists have found that models that explain educational decisions on the basis of financial returns do a pretty good job of predicting people’s actual decisions. (See, for example, Blundell et al. 2000.) So far, our model of educational decisions has used only words to describe the phenomenon; it ...
... Economists have found that models that explain educational decisions on the basis of financial returns do a pretty good job of predicting people’s actual decisions. (See, for example, Blundell et al. 2000.) So far, our model of educational decisions has used only words to describe the phenomenon; it ...
A. Perfect competition
... The selection of the two pricing strategies used here - Chamberlinian monopolistic competition and "focal pricing" - is guided by robustness and tractability. Monopolistic competition is the most commonly-used pricing assumption found in the theoretical literature on imperfect competition5. All AGE ...
... The selection of the two pricing strategies used here - Chamberlinian monopolistic competition and "focal pricing" - is guided by robustness and tractability. Monopolistic competition is the most commonly-used pricing assumption found in the theoretical literature on imperfect competition5. All AGE ...
advertising 1
... Since comparative advertising usually helps objectively demonstrate the merits of the products or services being compared, it stimulates competition, which is to the consumer's advantage as it may help him choose a good or a service from among those offered on the market. Entrepreneurs may use compa ...
... Since comparative advertising usually helps objectively demonstrate the merits of the products or services being compared, it stimulates competition, which is to the consumer's advantage as it may help him choose a good or a service from among those offered on the market. Entrepreneurs may use compa ...
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.