Microeconomics

Eric Dye
Flashcards by Eric Dye, updated more than 1 year ago
Eric Dye
Created by Eric Dye about 6 years ago
20
1

Description

Basic introduction-intermediate microeconomic topics

Resource summary

Question Answer
Demand Curve Shift Factors Income change Price of substitutes change Price of compliments change Preference change
Supply Curve shift factors Input price change Technology improvements
What are the two types of monetary policy Change in taxes (increase or decrease) Change in government spending (increase or decrease)
Consumer utility maximization fn & What is the equation of the consumer's constraints Max U = U(X,Y) & Y=Px*X+Py*Y
Demand Fn for Goods X & Y, for a utility maximizing consumer Qx = D(Px, Py, I, preference) & Qy=D(Py, Px, I, preferences)
Quantity Demanded (movement along demand curve) factors Price Change
Production Fn Q = zf(L,M,K) ------------------Key:-------------------- Z = technology L = Land M = materials K = capital
What is Average Product Average output per worker
What is the Average Product equation (Quantity of output)/(# of laborers)
What is the Marginal Product of labor The amount of output produced from hiring one additional worker
What is the equation for the Marginal Product of labor MP(L) = (Change in Q) / (Change in # of workers)
Diminishing Marginal Product After a certain point the Marginal Product of a new worker will be less than the Average Product. Because after a while there will be too many workers for the workspace.
The optimal quantity of labor for a firm is where which two curves meet? Where Marginal Product meets Average Product
Economic Profit = Economic Profit = Total Rev - Explicit Cost - Implicit Cost Implicit costs = opportunity cost of running the firm
Two ways to Maximize Profit Maximize Quantities Minimize Costs
Cost Fn = C = C(W, K)
Average Cost (Total Cost) / (Total Quantity)
Marginal Cost (Change in Cost) / (Change in Output)
If MC > AVG Cost the... Decreasing Returns to Scale
If MC < AVG Cost = Increasing Returns to Scale
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