Supply Side-ShortRun

Supply Side-ShortRun - Supply Side-Short Run A...

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Unformatted text preview: Supply Side-Short Run A. Introduction !"#$#%&'(')&%")* +,-%.'/0)"1"234%%%% 56"&7/$8")%97)/$8")*%%:%;%<+=>?>@-%%#0"A#%$0'%BCD8B7B%CB"7)$%"<%"7$(7$%+:$0C$%/C)%E'%(6"&7/'&%28F')%&8<<'6')$%/"BE8)C$8")#%"<%6'#"76/'#%+=%;%=CE"6>%?%; !C(8$C1>%@%;%G$0'6%@'#"76/'#-%%%%%H"$'*%#7E#8$7$CE818$34 +I-%568/'#%"<%J)(7$# +K-%LC)C2B')$ B. Short-Run vs. Long-Run M0"6$N67)%N%)"$%C11%8)(7$#%/C)%E'%C&O7#$'& =")2N67)%N%C11%8)(7$#%/C)%E'%C&O7#$'& C. Short-Run Example Definitions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hat happens if the price of an input4,56$&2#$!"#$+.)7$8&20&*)#$9+3!3:$$ "#$#%&'()#$*#)+,-$#%(#./0!12#3$+.$)&*+2$ changes? (Say the price of labor falls.) ;<=$$!+!&)$9+3!3$>$;?<$@$;A< Application: Allocation of Production among Multiple Plants B?<=$$&8#2&C#$D0%#/$9+3!3$>$;?<$E$F Yet another approach. Maximize output for each level expenditures. BA<=$$&8#2&C#$8&20&*)#$9+3!3$>$;A<$E$F Rearrange Equation (1) as: B;<=$$&8#2&C#$!+!&)$9+3!3$>$;<$E$F$>$4;?<$@$;A<6$E$F$>$4;?<EF6$@$4;A<EF6$> B?<$@$BA<: G<=$$'&2C0.&)$9+3!$H$!"#$9+3!$+D$(2+/190.C$&.$&//0!0+.&)$1.0!$+D$+1!(1! G<$>$ (3) F$>$ ;A<$E F ;<$E ;"#$D023!$!,+$9+)1'.3$+D$!"03$!&*)#$3"+,$"+,$!"#$&'+1.!$+D$+1!(1!$8&20#3$&3 o!"#$D02'$"02#3$&//0!0+.&)$)&*+2:$$;"&!$03tures, is obtained when the marginal product of an input r, maximum output, given expendi-$!"#7$/#3920*#$!"#$(2+/19!0+.$D1.9!0+.:$ <+)1'.3$4I6$&./$4J6$&2#$3+'#$8&20&*)#3$13#/$!+$/#3920*#$!"#$(2+/19!0+. per dollar spent on the input is the same. 2#)&!0+.3"0(:$$;"#$2#'&0.0.C$9+)1'.3$&2#$!"#$9+3!3$+D$(2+/190.C$8&20+13$)#8#)3$+D +1!(1!$*7$"020.C$&//0!0+.&)$)&*+2-$&331'0.C$!"&!$&//0!0+.&)$,+2K#23$9+3!3$LMN$(#2 ,+2K#2:$$O#$,0))$/#208#$&))$!"#$#)#'#.!3$+D$!"03$9+3!$!&*)#: P%&'()#$,0!"$,$>$LMN 5 N M R I J S F N MN RS IS JN JR GQ5 BQ5 ;?< LRN RN RN RN RN RN ;A< ;< B?< BA< B;< G< © Bryan L. Boulier, 2011. All rights reserved. ...
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This note was uploaded on 03/16/2011 for the course ECON 101 taught by Professor Fon during the Spring '06 term at GWU.

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