ECN 102- Midterm Exam Guide - Comprehensive Notes for the exam ( 92 pages long!)
Document Summary
The (cid:373)o(cid:396)e i(cid:374)elasti(cid:272) the de(cid:373)a(cid:374)d, the la(cid:396)ge(cid:396) is the (cid:271)u(cid:455)e(cid:396)s" sha(cid:396)e of the ta(cid:454). Firm"s opportu(cid:374)it(cid:455) cost of produ(cid:272)tio(cid:374): a fi(cid:396)(cid:373)"s oppo(cid:396)tu(cid:374)it(cid:455) (cid:272)ost of p(cid:396)odu(cid:272)tio(cid:374) is the (cid:448)alue of the (cid:271)est alternative use of the resources that a firm uses in production. The firm"s co(cid:374)strai(cid:374)ts: the fi(cid:396)(cid:373)"s p(cid:396)ofit is li(cid:373)ited (cid:271)(cid:455) th(cid:396)ee featu(cid:396)es of the e(cid:374)(cid:448)i(cid:396)o(cid:374)(cid:373)e(cid:374)t: technology constraints. Long-run decisions are not easily reversed. sunk cost: is a cost incurred by the fi(cid:396)(cid:373) a(cid:374)d (cid:272)a(cid:374)(cid:374)ot (cid:271)e (cid:272)ha(cid:374)ged. Product curves: show how the fi(cid:396)(cid:373)"s total p(cid:396)odu(cid:272)t, (cid:373)a(cid:396)gi(cid:374)al p(cid:396)odu(cid:272)t, a(cid:374)d a(cid:448)e(cid:396)age p(cid:396)odu(cid:272)t (cid:272)ha(cid:374)ge as the firm varies the quantity of labour employed. Diminishing marginal returns are so pervasive that the(cid:455) a(cid:396)e ele(cid:448)ated to the status of a (cid:862)la(cid:449). (cid:863) The positio(cid:374) of a firm"s (cid:272)ost (cid:272)ur(cid:448)es depe(cid:374)ds o(cid:374) t(cid:449)o fa(cid:272)tors: technology, prices of factors of production. The firm"s produ(cid:272)tio(cid:374) fu(cid:374)(cid:272)tio(cid:374) is the relationship between the maximum output attainable and the quantities of both capital and labour.
