General Economic Equilibrium - Institute for Advanced Studies (IHS)
... which imply that preference ordering, and then the social welfare is expressed as some function, W(Ul, . .. , Un) of the individual utilities. The function W will change appropriately if the utility indicator for the given preference orderings is changed, so that the entire representation is consist ...
... which imply that preference ordering, and then the social welfare is expressed as some function, W(Ul, . .. , Un) of the individual utilities. The function W will change appropriately if the utility indicator for the given preference orderings is changed, so that the entire representation is consist ...
Factor Proportions Theory
... The previous lemma directly implies (Samuelson 1949) that: FPE Theorem If two countries produce both goods under free trade with the same technology and FIR does not occur, then they must have the same factor prices Comments: Trade in goods can be a “perfect substitute” for trade in factors Countrie ...
... The previous lemma directly implies (Samuelson 1949) that: FPE Theorem If two countries produce both goods under free trade with the same technology and FIR does not occur, then they must have the same factor prices Comments: Trade in goods can be a “perfect substitute” for trade in factors Countrie ...
Short-Run Cost Minimization
... Definition: A function that shows how the firm’s cost-minimizing quantity of input varies with the price of that input. Labor demand curve: Shows how the firm’s costminimizing quantity of labor varies with the price of labor. Capital demand curve: Shows how the firm’s costminimizing quantity of capi ...
... Definition: A function that shows how the firm’s cost-minimizing quantity of input varies with the price of that input. Labor demand curve: Shows how the firm’s costminimizing quantity of labor varies with the price of labor. Capital demand curve: Shows how the firm’s costminimizing quantity of capi ...
IPPTChap011
... Explain why the demand curve facing a perfectly competitive firm is perfectly elastic and serves as the firm’s marginal revenue curve Find short‐run profit‐maximizing output, derive firm and industry supply curves, and identify producer surplus Explain characteristics of long‐run competitive e ...
... Explain why the demand curve facing a perfectly competitive firm is perfectly elastic and serves as the firm’s marginal revenue curve Find short‐run profit‐maximizing output, derive firm and industry supply curves, and identify producer surplus Explain characteristics of long‐run competitive e ...
Ch.7+Public goods
... The Profit-Maximizing Output Level • Profit – Total revenue (TR) minus total cost (TC) at each output level – The firm chooses the output level where profit is greatest ...
... The Profit-Maximizing Output Level • Profit – Total revenue (TR) minus total cost (TC) at each output level – The firm chooses the output level where profit is greatest ...
Microeconomics topic 2
... variable costs fall until a certain point but then increase. Falls due to improved efficiency and increasing returns. Rises due to inefficiency and ...
... variable costs fall until a certain point but then increase. Falls due to improved efficiency and increasing returns. Rises due to inefficiency and ...
Production and Cost - BYU Marriott School
... Marginal Rate of Technical Substitution – Cobb-Douglas • Isoquants represent the combinations of inputs that produce a particular level of output • Slope of isoquant gives the rate at which we can trade one input for another leaving output unchanged – marginal rate of technical substitution (MRTS) ...
... Marginal Rate of Technical Substitution – Cobb-Douglas • Isoquants represent the combinations of inputs that produce a particular level of output • Slope of isoquant gives the rate at which we can trade one input for another leaving output unchanged – marginal rate of technical substitution (MRTS) ...
Chapter 5
... product of labor in the two sectors by labor allocation at G. • If free trade raises clothing’s price, labor shifts out of food into clothing (from G to G’). • The wage rate rises but not as much as clothing’s price. • In each sector the price (unit cost) change must be flanked by the relative chang ...
... product of labor in the two sectors by labor allocation at G. • If free trade raises clothing’s price, labor shifts out of food into clothing (from G to G’). • The wage rate rises but not as much as clothing’s price. • In each sector the price (unit cost) change must be flanked by the relative chang ...
Perfect Competition
... Maximization for a Perfectly Competitive Firm,” “Short-Run Loss Minimization for a Perfectly Competitive Firm,” and the subsection titled “The Perfectly Competitive Firm’s ...
... Maximization for a Perfectly Competitive Firm,” “Short-Run Loss Minimization for a Perfectly Competitive Firm,” and the subsection titled “The Perfectly Competitive Firm’s ...
Globalization - Russell Trenholme
... politicians of the intellectual resources needed to fairly evaluate alternative policies. The impoverished intellectual opposition to free-market policies consists of largely outdated Marxist theory supplemented by populist appeals and, in a few cases, romantic nativist theories. This book attempts ...
... politicians of the intellectual resources needed to fairly evaluate alternative policies. The impoverished intellectual opposition to free-market policies consists of largely outdated Marxist theory supplemented by populist appeals and, in a few cases, romantic nativist theories. This book attempts ...
Chapter 7: Perfect Competition
... Maximization for a Perfectly Competitive Firm,” “Short-Run Loss Minimization for a Perfectly Competitive Firm,” and the subsection titled “The Perfectly Competitive Firm’s ...
... Maximization for a Perfectly Competitive Firm,” “Short-Run Loss Minimization for a Perfectly Competitive Firm,” and the subsection titled “The Perfectly Competitive Firm’s ...
Perfect Competition
... 1. In a given market, demand is described by the equation QD = 1,800 - 10P and supply is described by QS = 200 + 10P. Determine the equilibrium price and quantity. 2. The marginal cost of a firm under perfect competition is given by the equation MC = 20 + 2QF. The market price is $50 per unit. Deter ...
... 1. In a given market, demand is described by the equation QD = 1,800 - 10P and supply is described by QS = 200 + 10P. Determine the equilibrium price and quantity. 2. The marginal cost of a firm under perfect competition is given by the equation MC = 20 + 2QF. The market price is $50 per unit. Deter ...
A Public Good
... shows the marginal cost of production of the entire fishing industry, is composed of the individual supply curves of the individual fishermen. But each fisherman’s individual marginal cost does not include the cost that his or her actions impose on others: the depletion of the common resource. As a ...
... shows the marginal cost of production of the entire fishing industry, is composed of the individual supply curves of the individual fishermen. But each fisherman’s individual marginal cost does not include the cost that his or her actions impose on others: the depletion of the common resource. As a ...
Trade effects of Brexit for the Netherlands
... Nevertheless, it is not clear what will be the political and economic reaction of the EU to Brexit and thus, what this withdrawal agreement will entitle. It is also not certain how trade policy and agreements negotiated by the European Commission (EC) on behalf of EU member states will be affected. ...
... Nevertheless, it is not clear what will be the political and economic reaction of the EU to Brexit and thus, what this withdrawal agreement will entitle. It is also not certain how trade policy and agreements negotiated by the European Commission (EC) on behalf of EU member states will be affected. ...
NBER WORKING PAPER SERIES DISTORTIONS AND ADJUSTMENTS IN DEVELOPING COUNTRIES Alejandra Cox Edwards
... 7The distinction between two types of tradable goods (X and M) and a nontradable good (N) is analytically convenient, and is at the very core of modern open economy macroeconomics. In practice, however, it is not easy to determine which goods are actually tradables and which are nontradables. Indeed ...
... 7The distinction between two types of tradable goods (X and M) and a nontradable good (N) is analytically convenient, and is at the very core of modern open economy macroeconomics. In practice, however, it is not easy to determine which goods are actually tradables and which are nontradables. Indeed ...
Chapter 5, Section 1
... (a) Some workers increase output but others have the opposite effect. (b) Additional workers increase total output but at a decreasing rate. (c) Only a few workers will have to wait their turn to be productive. (d) Additional workers will be more productive. ...
... (a) Some workers increase output but others have the opposite effect. (b) Additional workers increase total output but at a decreasing rate. (c) Only a few workers will have to wait their turn to be productive. (d) Additional workers will be more productive. ...
2. Openness and the Demand-for-Labor Curve
... product, which is defined for given goods prices and quantities of other factors. Under this interpretation, the labor demand curve depends on the chosen goods prices and quantities of other factors but not on whether the economy is open or closed. Formally, suppose we write the revenue function in ...
... product, which is defined for given goods prices and quantities of other factors. Under this interpretation, the labor demand curve depends on the chosen goods prices and quantities of other factors but not on whether the economy is open or closed. Formally, suppose we write the revenue function in ...
Short-run Production Costs
... the 4th unit, VC rises by increasing amounts for succeeding units of output • Shape of VC: when MP increases, fewer units of labor is needed to produce successive units of output; hence VC decreases for those units. • When diminishing returns set in, MP starts declining, larger & larger additional a ...
... the 4th unit, VC rises by increasing amounts for succeeding units of output • Shape of VC: when MP increases, fewer units of labor is needed to produce successive units of output; hence VC decreases for those units. • When diminishing returns set in, MP starts declining, larger & larger additional a ...
Chapter 3 Lecture notes
... Next we will see how to represent the effects of price changes on the labor demand curve. Start with some point on an existing demand for labor curve, say N d W ; P1 as shown in Fig. 3—5. Recall we can only let one thing change at a time, so we will hold the nominal wage rate fixed at W1 . The fi ...
... Next we will see how to represent the effects of price changes on the labor demand curve. Start with some point on an existing demand for labor curve, say N d W ; P1 as shown in Fig. 3—5. Recall we can only let one thing change at a time, so we will hold the nominal wage rate fixed at W1 . The fi ...
Chapter 5
... product of labor in the two sectors by labor allocation at G. • If free trade raises clothing’s price, labor shifts out of food into clothing (from G to G’). • The wage rate rises but not as much as clothing’s price. • In each sector the price (unit cost) change must be flanked by the relative chang ...
... product of labor in the two sectors by labor allocation at G. • If free trade raises clothing’s price, labor shifts out of food into clothing (from G to G’). • The wage rate rises but not as much as clothing’s price. • In each sector the price (unit cost) change must be flanked by the relative chang ...
English,
... directly affects the amount of another item that can be purchased. b. When the price of a substitute item decreases, consumers will purchase more of the substitute. i. A substitute is a product that is similar to and can replace another product. ii. For example, a substitute for pistachios would be ...
... directly affects the amount of another item that can be purchased. b. When the price of a substitute item decreases, consumers will purchase more of the substitute. i. A substitute is a product that is similar to and can replace another product. ii. For example, a substitute for pistachios would be ...
Review Notes Fall 2002
... If TR < TVC at Q*, the firm should shut down. If TR = TVC at Q*, the firm should be indifferent between shutting down and producing. A firm should exit the industry in the long run when—at its best possible output level—it has any loss at all. C. The goal of the firm revisited A principal is a perso ...
... If TR < TVC at Q*, the firm should shut down. If TR = TVC at Q*, the firm should be indifferent between shutting down and producing. A firm should exit the industry in the long run when—at its best possible output level—it has any loss at all. C. The goal of the firm revisited A principal is a perso ...
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.