1. Why do price changes cause a budget line to pivot while income changes cause a budget line to shifting a parallel manner?
Price changes cause a spending line to rotate, when it does this is opens up more open door for various mixes and divider climbing that beforehand were not reasonable. Income changes causes a spending line to move in a parallel way since it's twofold the first wage and you can now bear the cost of twice as a great part of the great.
2. Describe the utility maximizing condition in words.
To maximize satisfaction, the consumer should allocate their money income so that the last dollar spent on each product yields the same amount of extra marginal utility. When making a purchase decision, a consumer tries to get the greatest …show more content…
Why should sunk costs be ignored for decision making?
The reason is that they have already been incurred and are not recoverable, they have no impact on future expenses and advantages.
6. Why should a firm never hire a worker when negative marginal returns set in?
The reason is it will curve the marginal product curve on the horizontal axis bring the total product curve to its highest point. Hiring more people will reduce output and the firm will never operate in this range.
7.What is the difference between marginal cost and average total cost?
The distinctive between marginal cost and normal average total is that marginal cost is the adjustment in absolute cost emerging from the creation of extra units of output. Also, total cost is the aggregate of fixed and variable expenses
8. What was the most important concept presented in this video? Using your own words explain why you feel this way.
The most important concept presented in this video is basically the difference between accounting profits and economics profit. Accounting profit is the money left over after all explicit costs have been deducted from the firm’s total revenue. Accounting profit total revenue total explicit costs. Economic profits are the profit one makes over and above one’s opportunity cost. Economic profit =accounting profit+ implicit
Price changes cause a spending line to rotate, when it does this is opens up more open door for various mixes and divider climbing that beforehand were not reasonable. Income changes causes a spending line to move in a parallel way since it's twofold the first wage and you can now bear the cost of twice as a great part of the great.
2. Describe the utility maximizing condition in words.
To maximize satisfaction, the consumer should allocate their money income so that the last dollar spent on each product yields the same amount of extra marginal utility. When making a purchase decision, a consumer tries to get the greatest …show more content…
Why should sunk costs be ignored for decision making?
The reason is that they have already been incurred and are not recoverable, they have no impact on future expenses and advantages.
6. Why should a firm never hire a worker when negative marginal returns set in?
The reason is it will curve the marginal product curve on the horizontal axis bring the total product curve to its highest point. Hiring more people will reduce output and the firm will never operate in this range.
7.What is the difference between marginal cost and average total cost?
The distinctive between marginal cost and normal average total is that marginal cost is the adjustment in absolute cost emerging from the creation of extra units of output. Also, total cost is the aggregate of fixed and variable expenses
8. What was the most important concept presented in this video? Using your own words explain why you feel this way.
The most important concept presented in this video is basically the difference between accounting profits and economics profit. Accounting profit is the money left over after all explicit costs have been deducted from the firm’s total revenue. Accounting profit total revenue total explicit costs. Economic profits are the profit one makes over and above one’s opportunity cost. Economic profit =accounting profit+ implicit