ECON TEST 2 2
Terms
undefined, object
copy deck
- Total Profits =
- total revenue - total costs
- Total Revenue =
- price per unit x # of units sold
- If Profits go up
-
more resources are attracted to industry
Q goes up - If Profits go down
-
resources leave industry
Q goes down - Voluntary Exchange =
- mutual gains for both parties
- percentage change
- change in x / base x
- Elasticity =
- % change in response variable/ % change in what caused the response
- Elastic
- Greater than one
- inelastic
- less than one
- unit elastic
- = 1
- price elasticity of demand =
- % change in Q / % change in Price
- arc price elasticity
-
(Q1 - Q2) (P1 - P2)
-------- / ---------
(Q1 + Q2) (P1 + P2) - if Price goes up than
- Total Revenue goes up
- elasticity is always
- Positive
- Income elasticity of demand
-
>0 - normal good
<0 - inferior good - Cross price elasticity
-
>0 - substitutes
<0 - compliments
=0 - unrelated - Marginal Utility =
-
change in total utility
-----------------------
change in quantity - as Marginal Utility goes down
- diminishing marginal utility
- Plot Marginal Utility
- at midpoints on graph
- Positive Economic Profits
- Incentive for more resources to enter market
- Zero Economic Profits
- No incentive for resources to leave or enter
- Negative Economic Profits
- incentive for more resources to leave
- Short Run
- one input held constant
- Long Run
- all inputs free to vary
- Fixed Inputs
- cannot be changed in a short period of time
- Variable Inputs
-
inputs can be changed relatively quickly
ex: unskilled labor - Production Function
- relationships between inputs and outputs
- Average Product =
- Quantity / Labor
- Total Fixed Costs are
- CONSTANT - fixed costs do not vary
- TVC
- Price x Quantity
- MC =
-
P Labor
---------------
MP Labor - MP Labor=
-
Change in Q
-----------
change in L - AP Labor =
- Q / L
- AVC =
- TVC /Q
- ATC=
- TC / Q
- Averag Revenue =
- Product Price