ECON 201: Microeconomics , Week 7
ECON 201: Microeconomics , Week 7 Econ 201
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This 3 page Class Notes was uploaded by Jensine Bonner on Sunday March 27, 2016. The Class Notes belongs to Econ 201 at Towson University taught by Dr. Leppo II in Winter 2016. Since its upload, it has received 39 views. For similar materials see Microeconomic Principles in Economcs at Towson University.
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Date Created: 03/27/16
ECON: Microeconomics Notes taken, interpreted, and formatted by: Jensine Bonner Terms to Know: ^ (HH) Household (BF) Business Firm (G) – Government (D) Demand ^ (s) services (g) – goods (l) labor (S) supply (P) price ^ (QS) Quantity Supply (QD) – Quantity Demand (Es) Elasticity Supply ^ (K) Capital (Ed) Elasticity Demand (PD) Price Demanded (TR) Total Revenue ^ (MC) Marginal Cost (MP) Marginal Principle (MB) Marginal Benefit ^ (DWL) Dead Weight Loss (QR) Quantity Restriction (MRS) Marginal Rate of Substitution 3/21/16 Indifference Curves (cont.) A change in income causes a shift in the budget constraint Or A pivot could occur, but only when a change takes place in the price of a good Price increases- pivot inwards Price decreases- pivot outwards Chapter 8 Producer; Production Tech & Cost Accounting Costs Explicit Costs are payments that are made to non-owners Economic costs are essentially both implicit and explicit costs. These two combined are referred to as forgone costs Important Terms: Marginal Product of Labor: The change in total output of (1) additional Total Product Curve: Curve that represents a relationship between quantities of labor & quality of output Law of Variable Proportions: Eventually Diminishing Returns Y will increase at an increased rate Before it increases at a decreased rate, and before it decreases at an increased rate Marginal Product: Where you currently are at financially-> where you were Average Product: Total product divided by # of units of labor 3/23/16 Law of Variable Proportions-> Diminishing Returns (Y is output) Y will increase at an increases rate Before it increase at a decreases rate Before it decreases at an increases rate Want to produce at a line tangent to axis, right by negative 3/25/16 Fixed Costs: Costs that do not change as output changes (ex. salary, rent/lease agreement) Total Variable Cost: Cost that changes as the BF’s change output (ex. hourly wages, electric, cost of goods sold) Total Cost: FC + TVC (Fixed + variable cost) Marginal Cost (MC): Change in TC from producing (1) more (g) &/or (s) Avg. Fixed Cost: Avg. Variable Cost: TVC / Q produced Avg. Total Cost: AFC + AVC or TC / Q produced The total cost of an item would mirror the TVC Diminishing returns sets in, & it begins to fall Marginal cost will pull the avg. cost MC increases, it will pull the AVC cost up, MC decreases, it will pull the AVC down AVC goes down hits MC, & goes back up ATC starts high, dips low, hits the MC, and starts to come back up again Supply is MC, they are equal. When you see one, it means that the other is there MC/S is production, but diminishing returns sets in Variable costs are changing, fixed stay the same Production factors affect ATC and FC when more is produced (why? Since you’re spreading your fixed costs out) ATC starts high because the FC is being spread thin LRTC: (Long Range Total Cost) The total cost of producing when there is a total flexibility in inputs LRAC = LRTC / Q Economies of Scale: w/ an increase in production the (BF) has decreased in LRAC The real cost for BF does not go up The nominal or face value may, but not the real cost End of Week 7 notes. I hope that they were helpful to you. Notes will be uploaded weekly, so be sure to come back again! Up Next: Bundle of Notes for Test #2 Jensine
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