Chapters 6 & 8
Micro Exam
change in output --------------------- change in labor
Marginal Product in Labor (MP)
output ---------------- # of workers
Average Product of Labor
fixed cost + variable cost (fc) (tvc)
short run total cost (STC)
change in short run total cost change in total variable cost --------------------------------- --------------------------------change in output change in output
short run marginal cost (SMC)
fixed cost --------------- output
average fixed cost (AFC)
total variable cost ---------------------- output
Short Run Variable Cost (SVC)
Average Fixed Cost + Short Run Average Cost Short run total cost ---------------------------output
Short Run Average Total Cost (SATC)
% Change in Quantity Demanded ----------------------------------- % Change in Price
Elasticity Equation
Max willing to pay - actual amount paid
Consumer benefit of trade
Actual amount sold for - lowest price they would sell for
Producer benefit of trade
Regulates the max price the good can sell for
Maximum Price policy (Price Ceiling)
Regulates the minimum price the good can sell for
Minimum Price policy (Price Floor)
The price ceiling or floor will not affect the market equilibrium
non-binding
It depends on the price elasticity of demand high elasticity - less tax passed low elasticity - more tax passed
How much tax will be given to consumers
Free market equilibrium is inefficient supply curve shifts to the left
Spillover Cost
Causes the Demand curve to shift to the right will be more productive
Spillover benefits
You cannot change all factors of production
Short run
you can change all factors of production
long run
They will hit max, then go down due to diminishing returns
MP and AP graph
yuh
MC, AFC, SAVC, SATC,