The customer will not be in equilibrium unless the substitution condition is satisfied.
If the consumer is willing to pay more for X than they have to, they will
substitute towards X such that (MRSX,M > Px/Pm).
Example: Unit Root Investigation
Consider simulated random-walk data (with no trend or constant):
Estimate model with constant & trend, where we apply automatic
selection of lags:
Economics 201 Notes
Theory for a changing world?
In economics we try to develop simplified models of the economy to aid us in achieving
some understanding of the economy itself. When trying to understand the economy we
are confronted with two p
[PRODUCTION AND TECHNOLOGY]
Production: transformation of raw materials into final commodities through a value adding
Consumption: Involves the taking in of only the goods and services that are ultimately the
sources of utility.
[USING MARKET POWER: MARKUP MODEL, PRICE DISCRIMINATION AND PREDATORY BEHAVIOUR]
The law of one price: different units of the same good sell for the same price but just like
many laws; there is a tendency to over look it.
Eskom sells electrici
[GAMES, CHEATING&PUNISHING AND OLIGOPOLY]
The main significance of barriers to entry is that they restrict the number of firms in an
industry and thus generate market structures that are monopolistic and oligopolistic
(markets with fewer fi
[INFORMATION, INSTITUTIONS AND POWER]
The idea that the second best choice has close resemblance to the first best choice in some
cases is in fact incorrect. Second best could mean a total deviation from the first best option.
[GENERAL EQUILIBRIUM, WELFARE ECONOMICS AND THE SPECIAL THEORY OF FIRST BEST]
Where intersectoral effects and the economy are significantly affected, the general
equilibrium (GE) approach dispenses ceteris paribus and abandons the pretence t
There is currently a large debate in South Africa with regards to
decent work. On the one side we have the institutionalists arguing for
decent work and on the other side the distortionists arguing for free
or flexible markets, with no government contro
[COSTS AND CHOICE TECHNIQUE]
A profit maximising firm will set output such that marginal cost equals marginal revenue
The main difference between the short and long run is that in the short run the capital is
[CALCULATING COSTS AND DEFI
Powerful capitalist vs the Common Good
Being large confers significant market power to a firm and firms with market
power ca n abuse this power in various ways.
Main form of abuse is monopoly power whereby a firm increases its profits
[PREFERENCE:HUMAN CHOICES ACCORDING TO ORHTODOX ECONOMICS]
Becker suggests that the economic to utility maximization and rationality is based on three
The assumption that the individuals ability to maximize is equivalent to the
OFFICE OF VICE-CHANCELLOR
Tel: (046) 603 8149 Fax: (046) 603 7561
19 July 2016
Dear Alumni, Parents, Donors and Funders of Rhodes University
Over the past two weeks print and electronic media have reported on what has been
characterised as a financial cri