Econ. 101 Notes 2

Econ. 101 Notes 2 - -consumption: U=U(x1, , xn) -max....

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-consumption: U=U(x1, …, xn) -max. (pleasure – pain) -law of equal marginal utility per cent/dollar/etc. (advantage)-last dollar spent on one item will generate same satisfaction as expenditure of said dollar on any other good -MUx/Px=MUy/Py, where x and y are separate goods, MU is marginal utility, P is price -MUx/MUy=Px/Py, is also true -graph of marginal utility is derivative of graph of total utility, part of graph of marginal utility sloping downward becomes demand curve -consumer surplus-if you are willing to pay more for a product but its market price is less, any money you save becomes consumer surplus (ex. water is free, but if necessary people would pay much more for it); area above the price line, but below the demand curve -Q(T)=f(k, N, …, L) -short run-all resources are fixed except for labor -law of diminishing marginal returns-as labor increases, output initially increases, but eventually there get to be too many workers and output begins is decrease -average physical product of labor-how much output is produced in relation to the number of
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This note was uploaded on 05/13/2011 for the course ECON 101 taught by Professor Balaban during the Fall '07 term at UNC.

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Econ. 101 Notes 2 - -consumption: U=U(x1, , xn) -max....

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