Cost Curves
127
Cost Curves A. Family of cost curves 1. total cost: c(y ) = cv (y ) + F 2.
c(y) = cv (y) + F y y y AC = AV C + AFC
3. see Figure 20.1. 4. marginal cost is the change in cost due to change in output c0 (y ) = dc(y )=dy = dcv (y )=d
Profit Maximization
120
Profit Maximization A. Profits defined to be revenues minus costs 1. value each output and input at its market price -even if it is not sold on a market. 2. it could be sold, so using it in production rather than somewhere e
Slutsky Equation
64
Slutsky Equation A. We want a way to decompose the effect of a price change into `simpler' pieces. 1. that's what analysis is all about 2. break up into simple pieces to determine behavior of whole B. Break up price change into
Consumer's Surplus
93
Consumer's Surplus A. Basic idea of consumer's surplus 1. want a measure of how much a person is willing to pay for something. How much a person is willing to sacrifice of one thing to get something else. 2. price measures mar
Technology
116
Technology A. Need a way to describe the technological constraints facing a firm 1. what patterns of inputs and outputs are feasible? B. Inputs 1. factors of production 2. classifications: labor, land, raw materials, capital 3. usual
Cost Minimization
124
Cost Minimization A. Cost minimization problem 1. minimize cost to produce some given level of output:
x1 ;x2
min w1 x1 + w2 x2
s.t. f (x1 ; x2 ) = y
2. geometric solution: slope of isoquant equals slope of isocost curve. F
MACROECONOMICS ECO 201_1A LUZ MIREYA GONZALEZ
1. Are doing good for other and doing well for oneself , conflicting ideas according to Adams Smith? No, according to Mr. Adams smith you can do well in your own benefit and the same time help others to make b