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17 Cards in this Set

  • Front
  • Back
Name 3 Return to Scale (RTS)
1. Increasing RTS
2.Constant RTS
3. Decreasing RTS
Give N, L, K and Q meanings for the 3 RTS.
1. 2N, 2l, 2K = 3Q
2. 2N, 2l, 2K = 2A
3. 2N, 2l, 2K = 1.5Q
Graph income leisure trade-off,and label each axis.
tax effect
MUa = MUb = MUe
Pa Pb Pe

Qa Qb Qe
Degine Marginal Revenue Products of labor.
Pn * MPn
what is LRATC?
Long Run Average Total Cost.
What is the name of the thereom? Who invented it?
Envelope thereom, Slutsky invented it.
Graph indifference Curve. Provide the ratios. Do the curves touch?
On the indifference curve they touch at only 1 point. That point is -MUx/MUy =
Define Physical Capital and Human Capital.
Physical Capital - "K", machinery equipment.
Human Capital - "N", EE skill based.
Name 4 out 6 Characteristics of pure/perfect competition.
1. lots f sellers, 2. homegenous products, 3. easy entry/exit, 4. price taker, 5. no economic profit
Define Marginal Rate of Substitution
MRSx,y = -MUx/MUy
What is the shut-down rule?
TC TR VC, stay in business for SR
TC TR VC, shut down in the LR.
TR VC, shut down NOW!
What is Substitution Effect and what is Income Effect?
Px Qx Qy
Px DisposableIncome Qx Qy
Define Factor Distribution of Income.
MPl/Pl MPn/Pn MPk/Pk
Ql Qn Qk
Define 3 compensating wage of differential
1. skill level
2. danger
3. fun level
Use #11 and now the price of beer is $2.50 Was this a partial shift or full shift? what is partial and fullshift?
Partial shift
partial shif in 1 price only
full shift in both prices or shift in income.