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Unformatted text preview: one another for inferior goods Giffen good Labor vs. leisure tradeoff Budget line is income = w*leisure + (# hours available * w) Slope = w Income and substitution effects always in different directions Chapter 9 Profit, Productivity, and Costs Production formulas MP, AP MP> AP AP rising MP < AP AP falling MP crosses AP at maximum of AP Cost formulas TC = FC + VC ATC = AFC + AVC MC = change in total cost or change in variable cost as output increases Long run costs Economies and diseconomies of scale Chapter 10 Perfect Competition Characteristics Graphs of MR and costs Maximize profit where MR = MC Profit = q x (P ATC) Shutdown rule P < AVC Long run supply External economies and diseconomies...
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 Spring '08
 Blanchard
 Utility

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