2/4/08 Elasticity "Compare" means that the question is about elasticities in some way. It also means we need two panels So far, the only possible difference across the two panels is elasticity of demand. The question becomes, what about the wording t
2/11/08 Elasticity Suppose the Akron tire company invents a new machine for making tires and applies for a patent. Compare the effect if the patent is approved vs. if it is denied. Answer: We see compare so we can draw 2 panels. Then, we understand i
3/26/08 Revenue The pattern linking revenue and output is dependent upon what type of industry is being analyzed. In particular, dependent upon how much competition there is. *Industry structures/ market structures- aligopily- small number of competi
3/31/08 Two things to note about the formula 1) It is not a string of meaningless gibberish. a) if you don't remember the formula, derive from scratch 2) It serves a purpose: it makes it esy to put a sign on profit, using the picture in this case, >0
"Increase in demand"
1/16/08 "Increase in quantity demanded"
An "increase in demand" means the entire demand curve is shifting. "Increase in quantity demanded" means some point is moving along the demand curve. Supply The law of
1/28/08 Incorrect method Show the effect in the market for chocolate chip cookies of an increase in price (input) of chocolate chips and decrease in price of milk (complement).
When both curves are shifting, the combined effect on one variable (coul
3/24/08 Up to now, short run; What about long run? A firm only views K as a planning tool. Chosen in consequence of having chosen a very narrow band for output level, Q=. It's called the scale of operation If we remind ourselves of what ATC consists
Use a completed table of cost and revenues to calculate and show the standard equalibrium conditions in the market for Microsoft hard drive crasher pro.
Now use a second copy of your analysis to calculate and show why economists might be co
2/27/08 Suppose there are 2 orange juice factories in lake whales fl: A Florida's Natural factory, and a 2nd factory that produces orange juice for all major brands. Suppose the city is considering charging a tax on one of the 2 factories ($100/ truc
3/03/08 Theory of the Firm The main objective is to determine why supply curves slope up. How does a firm choose its Q? All firms do everything they do so as to maximize profit. That implies that it is our job to figure out the pattern between one mo
Suppose the equalibrium price of credit is 33%, and congress is considering a law making it illegal to charge more than 21.5%. Senator Phant is opposed to the law because it will reduce the volume of credit worthy approvements. Senator Key b
3/17/08 In the short run a firm can only change the number of employees (not the size of the factory) = marginal product of labor= the increase in output that resulted from the addition of the final unit of labor. MC= total cost resultingfrom the las
1/14/08 Supply and Demand Supply Demand Always seller Always buyer Not always a company Not always individual factors of production* Demand-buyers (foil-wrapped ice cream cones) Law of Demand- Ceteris Paribus, if the price of a good or service increa
4/02/08 A firm can experience < 0 and still choose > 0 provided that for < FC. (we still call this decision, "operate") but suppose > FC and < 0. Then the firm chooses = 0. We call this decision "shut down." Rule In the short run, a firm operates if
2/18/08 Government Interventions 2 major forms: Price Controls and Taxation 2 forms of price controls: Price Ceiling- cannot charge more than a certain amount for a product Price floor-cannot pay less than a certain amount for a product In both cases
Blake Roby 1/9/08 What is Economics? Economics is the study of the allocation of scarce resources among competing ends i.e. the study of how limited goods and resources are divided among multiple people All Societies require a mechanism for deciding
2/25/08 Taxation- Advalorem does not = sales tax Tax is charged per unit transacted, not per dollar spent. Assume these taxes are always charged to the seller. For that reason, we need to go back and revisit the supply curve. It's all about willingne
4/09/08 Monopolies are bad 2nd cornerstone Monopolies have market power "Consumer Surplus"- consumer gains from transaction what it is worth-actually paid "Producer Surplus"- seller gains from transaction access total revenue-expected sales consumer
4/07/08 Monpoly An industry with one seller; perfect barriers to entry Three different types of monopoly +code words 1) Intellectual property monopoly Monopoly created by the government through patent or copyright? Why? To incent Examples: Microsoft,
3/19/08 Our job was to establish a pattern between output and cost At least in the short run we've got one big piece of the pattern. It would be incorrect to say "because of the law of eventually diminishing marginal product." Correct: "Since a unifo
1/30/08 How sensitive a change in quantity is to a change in price
The amount that people want to buy is non-zero If the price of both goods is raised by the same amount Elastic- demand is more sensitive to a change in price Inelastic- demand is les
2/13/08 Expectations Compare- about elasticities in some way. 2 panels So far, difference across the 2 panels is elasticity of demand, which implies that the supply curve must be the same across the two panels. Supply shift doesn't have to be left.
1/23/08 Supply and Demand together
Lets use " " to represent the number of ice cream cones buyers are willing to buy at price P When , we call that a shortage Example: Dave wants a 30ft Hinckley sailboat (1982, sail-ready, keel, helm, steering, 30hp