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6 Cards in this Set

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Elasticity of Demand = ?
(Difference of Two Quantity Changes)/(Midpoint of two Quantity Changes) = A1

(Difference of Two Price Changes)/(Midpoint of two Price Changes) = A2

Ed = A1/A2
What is the relationship btwn elasticity of product demand vs elasticity of resource demand?
The greater the elasticity of product demand, the greater the elasticity of resource demand
Degree to which resources are substitutable?
The larger the number of substitute resources available, the greater the elasticity of demand for a particular resource
The larger the proportion of total production costs accounted for by a resource, --? (Ed)
The greater the elasticity of demand for that resource
Profit-Maximizing Combination of Hiring Labor and Capital
(MRPLabor/PLabor) = (MRPCaptial/PCapital) = 1
Real GDP = ?
(nominal GDP)/(Price Index -in hundreths)