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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, utility given budget

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