Please enable JavaScript.

Coggle requires JavaScript to display documents.

Econ (Costs (Measuring Costs, Short Run Costs, Long run Costs, Lower costs…

- - - - variable z is a function of x and y
        => z=f(x,y)
      - Of Demand
      - of Supply
    - - Eq and Ep depends on Demand curve
      - D(p) = S(p,a)
        where a is the changing variable
        Examine the calculus
        dD/dp < 0
        dS/dp > 0
  - - - Substitution effect
        Change in quantity of a good that consumer demands
      - Income Effect
        
        Normal good
        
        inferior good
      - compensated demand curve
      - Slutsky equation
    - - Inflation
        
        Effects of Inflation Adjustment
        
        CPI Adjustment
        
        True COLA
  - - - For-profit - 75% of GDP
        
        Production function
        q = f(L,K)
      - Public firms - 12%
      - Non-profit - 13%
    - - a period of time so brief that at least one factor of production can't be changed (one input is fixed) #
      - Marginal product of labor
        
        addition output produced by an additional unit of labor holding all other factors constant.
        MP = change in q / change in L = change f(L,K)/ change in L (holding K constant )
      - Average product of labor
        the ratio of output to the amount of labor employed
        AP = q/L #
      - Law of Diminishing Marginal Returns
    - - Cobb-Douglas production function
        q= A(L^a)(K^b)
      - The freedom to vary both inputs provides firms with many choices of how to produce (labor-intensive or capital-intensive)
      - Isoquant curve
        
        Perfect sub
        Fixed proportion
        Convex
        
        MRTS is the slope of an isoquant at a single point, TELLS US HOW MANY UNITS OF k THE FIRM CAN REPLACE AN EXTRA UNIT OF L (q constant)
        MRTS = Change in K / Change in Labor = Dk/Dl
        
        Tangent
        The further the greater the output
        Do not cross
        Slope downward
        
        HOLD QUANTITY CONSTANT
- - - - Determine preference # Indifference curve
        Consist of all those bundles that correspond to a particular utility measure
      - MRS depends on how much extra utility Lisa gets from a little more of each good
        MRS = dq1/dq2 = - (U1/U2)
      - Marginal Utility
        (The marginal utility we get from a little more of one good, holding the other quantity constant)
        U1 = change in U / change in q1 = dq1
    - - Constrained consumer choice
        
        Tangent IC and Budget Line
        MRS = MRT = - (p1/p2)
        # #
        
        Interior Solution
        
        positive amount of all goods
        
        Max Utility
        
        Corner solution
        
        Negative amount of one good
        
        Min Utility
  - - - measure the increase in his/her income needed to maintain utility at its initial level.
      - Consumer surplus
        (monetary difference between the max amount that a consumer is willing to pay for the quantity purchased and what the good actually costs)
        
        Uncompensated demand function because it assumes INCOME IS FIXED - Marshallian function
        
        Price changes -> welfare changes -> utility changes
        (effect of price change on CS?)
        
        if the price rises, purchasers of that good lose consumer surplus (falls by a+b)
        
        This is the amount of income (a+b) we would have to five the consumer to offset the price change.
        
        The area under the inverse demand curve and above the market price up to the quantity purchased by the consumer )
      - Imprecise because Utility varies along the curve
    - - Compensating variation
        
        give money to keep consumers back to their satisfaction level
      - Equivalent variation
        
        take-away money to harm consumers
      - Hicksian demand curve
        
        Utility kept fixed and Utility is constant
      - Compensated Demand Curves and Consumer Welfare
    - - Quotas
        
        Budget constraints
        
        Budget line
        
        They are worse-off
      - Welfare program
        
        food stamps can only be used on food, consumers are potentially worse off if they would find it optimal to consume less food and more other goods than allowed by the program
        
        To reduce expenditures on drugs and alcohol
        
        Encourage appropriate expenditure on food from a nutrition standpoint
        
        Maintain program support from taxpayers
    - - Leisure
        (Trying to max utility with 2 constraints)
        maxU= U(Y,N) = U(wH, 24 - H)
        
        Utility U=U(Y,N)
        
        Time constraint: H = 24 - N
        
        Total income constraint: Y= wH + Y*
        
        Slope of indifference curve = slope of budget line
        MRS = - Un/Uy = MRT
      - Income and Substitution Effect
      - Shape of the Labor Supply Curve