Economic examples are indifference curves and

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Unformatted text preview: ensions. Economic examples are indifference curves, and isoquants. Variables vs. Parameters Let’s see some more examples of functions. Ex.2 Ex.3 Ex.4 What is similar, and what is different, between Ex.2, Ex.3, and Ex.4? They all contain constants, while in Ex.3 and Ex.4 the constants a and c are unknown, so we call them parameters. It is important to be able to distinguish parameters or constants from variables. The variables in the above examples are x and z; we assume these variables can change. Parameters and constants we take as given. Economic examples of multivariate functions Cobb-Douglas Utility function: Cobb-Douglas Production function: ; ; Let’s focus on production, as utility is more of an abstract concept. Ex.5 In Ex.5, output is produced by combining capital (K) and labour (L). What does this function look like? If we fix output at a certain level, and graph all the different amounts of K and L that we can combine to exactly attain the desired level of output, we have a...
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This note was uploaded on 01/24/2013 for the course ECON 203 taught by Professor Okhan during the Spring '11 term at University of Victoria.

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