LEC4_factor_markets_post .pdf - Factor Markets II 2019 1 The new abnormal 2 Insurance costs dwarf Cal fire costs in 2017-2018 3 Who pays these costs 4

LEC4_factor_markets_post .pdf - Factor Markets II 2019 1...

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1 Factor Markets II 2019
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The new abnormal 2
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Insurance costs dwarf Cal fire costs in 2017-2018 3
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Who pays these costs? 4
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Inverse condemnation? 5
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Who benefits from inverse condemnation? 7
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8 Outline 1. Introduction 2. Production with 1 input and 1 output 1. Production functions 2. Marginal product 3. Marginal revenue 4. Derived factor demand 5. Comparative statics 3. Production with 2 inputs and 1 output 1. Production functions 2. Marginal product, MRTS 3. Marginal revenue 4. Derived demand 5. Comparative statics
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9 .
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10 L K Production with two variable inputs : Graph 20 15 10 5 0 20 15 10 5 0 300 200 100 0 y Q L
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Project this surface into factor input space 11
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12 Isoquants : graph E L
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13 Isoquants: Math EL L L E E + - + - = 2 2 16 20 10
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14
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15 MRTS : math
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MRTS math Alternatively, start with the isoquant and totally differentiate with respect to E and L 16
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