ECON 1B03 Lecture Notes - Lecture 16: Marginal Product, Demand Curve, Economic Equilibrium
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ECON 1B03 Full Course Notes
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Before tax: equilibrium price = , equilibrium quantity = 900. If the government levies 50 cents on firms, the demand curve is affected: qd = 915 5pc. Firm gets: pf = pc-. 5 so qs = 300(pc-. 5) = 300pc 150. In this case, the consumer bears the larger burden of the tax, ie the least elastic. Now suppose the tax is levied on consumers- we should get the same numbers: The supply curve is affected, qs = 300pf. New equilibriums: pf=2. 99, pc = 2. 99 + . 5 = . 49 , q = 897 (allow for rounding) Profit the total revenue minus the total costs (represented by the pi symbol) Total revenue amount firm receives for the sale of its output. Total cost the market value of the inputs a firm uses in production. A firm"s economic costs of production includes opportunity costs of making its output of goods and services. Explicit require a direct outlay of money (ie get receipt for it)