Chapter 22
Cost Curves
Types of Cost Curves
A total cost curve is the graph of a
firms total cost function.
A variable cost curve is the graph of
a firms variable cost function.
An average total cost curve is the
graph of a firms average total cost
func

Chapter 22
Firm Supply
Firm Supply
How does a firm decide how much
product to supply? This depends
upon the firms
technology
market environment
goals
competitors behaviors
Market Environments
Are there many other firms, or just a
few?
Do other firms

Chapter 19
Profit
Maximization
Economic Profit
A firm uses inputs j = 1,m to make
products i = 1,n.
Output levels are y1,yn.
Input levels are x1,xm.
Product prices are p1,pn.
Input prices are w1,wm.
The Competitive Firm
The competitive firm takes all out

Chapter 20
Cost
Minimization
Cost Minimization
A firm is a cost-minimizer if it
produces any given output level y
0 at smallest possible total cost.
c(y) denotes the firms smallest
possible total cost for producing y
units of output.
c(y) is the firms

Chapter 15
Market Demand
From Individual to Market
Demand Functions
Think of an economy containing n
consumers, denoted by i = 1, ,n.
Consumer is ordinary demand
function for commodity j is
x*j i (p1 , p 2 , mi )
From Individual to Market
Demand Function

Chapter 6
Demand
Properties of Demand Functions
Comparative statics analysis of
demand functions - the study of how
demands x1*(p1,p2,y) and x2*(p1,p2,y)
change as prices p1, p2 and income y
change.
Own-Price Changes
How does x1*(p1,p2,y) change as p1
cha

Chapter 3.
Preferences
1
Ordinal Preference Relations
Comparing two different consumption
bundles, x and y:
strict preference: x is more preferred
than is y.
weak preference: x is as at least as
preferred as is y.
indifference: x is exactly as preferre

Chapter 4
Utility
Utility Functions
A preference relation that is
complete, reflexive, transitive and
continuous can be represented by a
continuous utility function.
Continuity means that small changes
to a consumption bundle cause only
small changes to

Chapter 2
Budget
Constraint
Two Parts to Consumer Theory
can afford budget constraint
best according to consumers
preferences.
2
Consumption Choice Sets
A consumption choice set is the
collection of all consumption
choices available to the consumer.
Wha

Chapter 1
The Market
Economic Modeling
What causes what in economic
systems?
At what level of detail shall we model
an economic phenomenon?
Which variables are determined
outside the model (exogenous) and
which are to be determined by the
model (endogen

Differential?
Derivative?
Derivative
The derivative of a function of a real variable
measures the sensitivity to change of a
quantity (a function or dependent variable)
which is determined by another quantity (the
independent variable). the derivative of

1
ECON 3000
ANSWER to PRACTICE FINAL
Winter 2015
This is an in-class closed books and closed phones exam. Answer all the questions on the
exam. Be sure to label clearly all relevant slopes, intercepts, etc. on your graphs. Good luck! :)
Multiple Choice
1

1
ECON 3000
PRACTICE FINAL
Winter 2015
This is an in-class closed books and closed phones exam. Answer all the questions on the
exam. Be sure to label clearly all relevant slopes, intercepts, etc. on your graphs. Good luck! :)
Multiple Choice
1. (5 point