2240163
| Question | Answer |
| Demand Curve Shift Factors | Income change Price of substitutes change Price of compliments change Preference change |
| Supply Curve shift factors | Input price change Technology improvements |
| What are the two types of monetary policy | Change in taxes (increase or decrease) Change in government spending (increase or decrease) |
| Consumer utility maximization fn & What is the equation of the consumer's constraints | Max U = U(X,Y) & Y=Px*X+Py*Y |
| Demand Fn for Goods X & Y, for a utility maximizing consumer | Qx = D(Px, Py, I, preference) & Qy=D(Py, Px, I, preferences) |
| Quantity Demanded (movement along demand curve) factors | Price Change |
| Production Fn | Q = zf(L,M,K) ------------------Key:-------------------- Z = technology L = Land M = materials K = capital |
| What is Average Product | Average output per worker |
| What is the Average Product equation | (Quantity of output)/(# of laborers) |
| What is the Marginal Product of labor | The amount of output produced from hiring one additional worker |
| What is the equation for the Marginal Product of labor | MP(L) = (Change in Q) / (Change in # of workers) |
| Diminishing Marginal Product | After a certain point the Marginal Product of a new worker will be less than the Average Product. Because after a while there will be too many workers for the workspace. |
| The optimal quantity of labor for a firm is where which two curves meet? | Where Marginal Product meets Average Product |
| Economic Profit = | Economic Profit = Total Rev - Explicit Cost - Implicit Cost Implicit costs = opportunity cost of running the firm |
| Two ways to Maximize Profit | Maximize Quantities Minimize Costs |
| Cost Fn = | C = C(W, K) |
| Average Cost | (Total Cost) / (Total Quantity) |
| Marginal Cost | (Change in Cost) / (Change in Output) |
| If MC > AVG Cost the... | Decreasing Returns to Scale |
| If MC < AVG Cost = | Increasing Returns to Scale |
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