ECON100A_11

ECON100A_11 - Review 1/4/2008 1 Question1 Initially, the...

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 1/4/2008 1 Review
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 1/4/2008 2 Question 1 Initially, the person below is: A. Saver B. Borrower C. Can’t Tell c 1 B A C c 2 I 1 I 2
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 1/4/2008 3 Question 2  The figure depicts what happens when r. ... A. Rises B. Falls C. Can’t Tell c 1 B A C c 2 I 1 I 2
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 1/4/2008 4 Question 3 The substitution effect causes the individual to borrow. ... A. Less B. More C. Can’t Tell c 1 B A C c 2 I 1 I 2
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 1/4/2008 5 Question 4 The income effect cause the individual to borrow. ... A. Less B. More C. Can’t Tell c 1 B A C c 2 I 1 I 2
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 1/4/2008 6 Market for Factors of Production Market for Finished Goods HOUSEHOLDS FIRMS DEMAND (for Goods $ $ $ $ SUPPLY (of Factors of Prod) CIRCULAR FLOW DIAGRAM SUPPLY (of Goods & Services)
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 1/4/2008 7 Overview We learned how households choose quantity of a given commodity they will consume, given prices and income. (Quantity demanded) But goods must be produced (i.e., supplied). We have yet to see how firms choose the quantity of goods they will produce, given prices and costs. (Quantity supplied) To analyze supply, then, we study production, costs, and profit maximization This will characterize trade-offs faced by the firm Later (100B): Equilibrium price will equate quantity supplied with quantity demanded
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 1/4/2008 8 Theory of Production
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 1/4/2008 9 Production Functions Types of factors: Q- Flow of output (phys units/time) L- Flow of Labor (person hrs/time) K- Flow of capital input (machine-hrs/time) M - Materials E – Energy, etc. Q=F(L,K,M,E.
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This note was uploaded on 03/15/2010 for the course ECON 100A taught by Professor Babcock during the Winter '07 term at UCSB.

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ECON100A_11 - Review 1/4/2008 1 Question1 Initially, the...

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