ECON 2G03 Lecture Notes - Lecture 4: Farad, Xz, Production Function

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whitecrab690

18 Sep 2016

School

McMaster University

Department

Economics

Course

ECON 2G03

Professor

Anastasios Papanastasiou

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Document Summary

Definition : technology determines the firm "s production possibilities . We begin by assuming that the firm has to. :} these are tools ie xn the inputs also called factors of production. , you are required to sacrifice 1in put some work etc . jt g milk , eggs , got freezer gxy hours of. The production ( possibilities ) set is all be produced with inputs x. xa . xn output y , ,xn ) such that at most units of output can y x. xa , inputs. Example : suppose that you need at least 1. 5 eggs to produce 1kg of ice cream . then : =d is feasible because if you sacrifice 2 eggs . you can produce 1kg of ice. =d is not y feasible because you need at least 1. 5 eggs to produce i kg of ice cream. The production set is the collection of all feasible combinations of inputs & outputs .

Related Questions

1. The Houston Chronicle reported that in Houston, the average price of new homes has decreased, while at the same time, the number of new homes sold has increased. This situation could be explained by which one of the following: (draw curves before answering)

An Increase in demand
An Increase in supply
A Decrease in demand
A Decrease in supply

2. In another market, the average price of new homes fell, while at the same time, the number of new homes sold decreased. The situation would best be explained by (Draw the curves before answering)

An Increase in Demand
An Increase in Supply
A Decrease in demand
A Decrease in supply

3. A consumer is said to have achieved maximum total utility when:

Purchases of Good A give the same satisfaction as purchases of Good B.
Purchases of the last dollar spent on Good A give the same satisfaction as purchases of the last dollar spent on Good B.
The average purchases per dollar of Good A give the same satisfaction as the average purchases per dollar of Good B.
The total utility derived from Good A is the same as the marginal utility derived from Good B.

4. You are given the following information about a firm's present output position: MPP (Marginal Physical Product) of Land = 12; MPP of Labor = 16; Price of Land = $2; Price of Labor = $4. With no additional money to spend, this firm should:

5. A firm achieves the least cost in production by substituting factors until

their factor prices are equal
their marginal products are equal to the factor prices
their marginal products are each equal to zero
the ratios of their marginal product equal the ratio of their prices
none of the above

6.The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything--more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is

correct if he is assuming a rightward-shifting PPF.
incorrect if he is assuming a rightward-shifting PPF.
correct if he is assuming a PPF that does not change.
none of the above

7. Assume your swimsuit business is at its maximum profit position, and one new change occurs: consumer incomes decrease. If swimsuits are normal goods, the equilibrium price of swimsuits will __________, and the CONSUMER surplus will ________.

increase, increase
decrease, decrease
increase, decrease
decrease, increase

8. Firms that shuts-down in the short-run still must pay:

Marginal cost
Variable cost
Fixed cost
Total cost

9. The term externalities refer to:

Black-market economic activity.
The impact on markets of imported goods.
The costs and benefits of a market activity borne by a third party.
The inequitable distribution of income.

10. If full external costs are not internalized, firms will tend to allocate more of society's scarce resources to produce than is societally warranted, and if full external benefits are not internalized, firms will allocate less of society's resources to produce than is societally justified. True/False.

11. Joe was very careful about smoking in his home until he bought a fire insurance policy. After buying the policy, he became careless. His attitude is: "I'm insured. What do I care if this place burns down; I'll just collect the money". Joe's attitude is an example of ______________.

12. Megatrust Bank had historically scrutinized loans very carefully and extended them, only to persons whom they considered very creditworthy. They made relatively few loans. However, after the government provided guarantees to sub-prime loans, Megatrust relaxed its standards and increased its loan volume. (And its default rate as well.) This is an example of _______________.

13. In the short-run, if a perfectly competitive firm finds itself operating at a loss, it will

Reduce the size of its plant to lower fixed costs.
Raise the price of its product.
Shut down.
Continue to operate as long as it covers its variable cost.

14. If income today is more equally distributed than it was in 1960, a Lorenz Curve depicting today's distribution would be

More bowed and to the left of the 1960's curve.
More bowed and to the right of the 1960's curve.
Less bowed and to the left of the 1960' curve.
Less bowed and to the right of the 1960's curve.

15. Which of the following statements is true?

As output increases, the average fixed cost becomes smaller and smaller.
Average fixed cost does not change as output increases.
The marginal cost curve intersects the average fixed cost curve at its minimum point.
When marginal cost is greater than average fixed cost, average fixed cost increases.

16. A firm in any of the market structures we have studied will maximize its profit (or minimizes its loss) when its

Average costs are at a minimum
Marginal revenue and marginal cost are the same.
Marginal revenue is less than marginal cost.
Marginal revenue is zero.

17. If the demand for a good increase, when the price of other good increases, these goods are

Capital goods
Substitute goods
Complementary goods
Luxury goods

18. Which of the following pairs of products are complementary goods?

mobile phones and laptops
pens and pencils
sugar and artificial sweeteners
radios and television
toothbrushes and toothpaste

19. The amount of a good that is given up to produce another good is:

Scarcity
Specialization
Opportunity cost
Trade
Efficiency

20. The most important characteristic of the equilibrium price is that it:

Guarantees that producers earn a profit.
Increases the quantity demanded.
Clears the market.
Decreases the quantity supplied.

21. Rank the following market structures based on the number of participating firms: From the fewest number of firms to the most number of firms:

Oligopoly
Perfect Competition
Monopoly
Monopolistic Competition

22. If firms in a monopolistically competitive market are earning economic profits which of the following scenarios would best reflect the change facing incumbent firms as the market adjusts to its new equilibrium?

an increase in demand
a decrease in demand
a downward shift in their marginal cost curve
an upward shift in their marginal cost curve

23. If labor in Mexico is less productive than labor in the United States in all areas of production,

neither nation can benefit from trade
Mexico can benefit from trade but the United States cannot
Mexico will not have a comparative advantage in any good
both nations can benefit from trade

24. Which of the following statements is false?

The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
Monopolistically competitive firms advertise to increase the elasticity of the demand curve they face.
Expensive advertising might help consumers if it is a signal that the product is good.
Brand names acquired at great cost might help consumers by assuring quality.

25. Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigs in surrounding states. Which of the following principles does this best illustrate:

people respond to incentives
rational people think at the margin
a trademark can make everyone better off
markets are usually a good way to organize economic activity

bluehare378

Match the definitions or complete the statements in the first part of the quiz with the appropriate terms found in the second part.

Definitions/Statements

1. _____ refers to marketersâ focus on a product rather than on the needs of the market.

3. The impact of technology on buyer behavior relates to factors such as ____; the use of technology to engage customers and build relationships; customization of products and promotional messages; and better prices and distribution.

4. In the case of situational influences, this relates to the situation in which or the occasion on which the product will be used, e.g., special occasion or everyday use.

5. In the case of situational influences, this relates to the fact if we are in a store, point-of-purchase displays could influence us to buy something. We could also make unplanned purchases because we remembered something from seeing the brand while we are in the store.

6. This discipline on which consumer researchers draw focuses on society and large groups in society such as family and social class.

7. This discipline on which consumer researchers draw focuses on cultures and differences among cultures.

8. These are temporary circumstances that affect consumer purchase decisions.

9. In the case of situational influences, this refers to the fact that the person and the occasion for which we are buying something influence our purchase decisions.

10. According to the simple model of consumer decision making, reference groups, family, social class, culture, and subculture are among the _____ on buyer behavior.

11. According to the simple model of consumer decision making, motivation, personality trait, perception, and attitudes are among the _____ on buyer behavior.

12. According to the simple model of consumer decision making, advertising, buzz agents, customized messages, social media, and word-of-mouth are examples of ____.

13. This discipline on which consumer researchers draw focuses on behavior in small groups and helps consumer researchers to understand issues such as opinion leadership, diffusion of innovations, and communication.

14. In the case of situational influences, ______ are consumer mood states or physiological state (for example, hunger, thirst) that influence consumer decision-making.

15. The selection of one or more segments by a marketer to serve.

16. Developing a distinct image for a brand in the mind of consumers.

17. This is an effort by a marketer to change the existing perception that consumers have of a brand.

19. ___ segmentation involves segmenting based on variables such as urban, rural, suburb, state, cities, counties, and regions.

20. ____ segmentation is based on variables such as consumersâ lifestyles as indicated by their activities, interests, and opinions.

21. This criterion for effective targeting says that marketers should have some way of deciding which consumers fall into which segments.

22. This criterion for effective targeting says that marketers should be able to reach segments with appropriate media and distribution channels.

23. This is the most popular segmentation system combining lifestyles and values of consumers.

24. This household segmentation model is based on a combination of geographic and demographic information and the principle that âBirds of a feather flock together.â

25. ______ is defined as âsending consumers personalized and prompt offers and promotional messages designed to reach the right consumers and deliver to them highly relevant messages at the right time and more accurately than when using conventional segmentation techniques.â

Terms

A. Positioning

B. Accessibility

C. Anthropology

D. Situational influences

E. Consumption situation

F. Task definition

G. Identification

H. Marketing-oriented

I. Targeting

J. Psychographic

K. Marketing myopia

L. PRIZM

M. Interactive and novel communication channels

N. Sociology

O. Demographic

P. Purchase situation

Q. Behavioral targeting

R. Antecedent states

S. Communication sources

T. Geographic

U. Sociocultural influences

V. VALS

W. Psychological influences

X. Social psychology

Y. Repositioning

Match the definitions or complete the statements in the first part of the quiz with the appropriate terms found in the second part.

Definitions/Statements

1. _____ refers to marketersâ focus on a product rather than on the needs of the market.

2. _____ companies do not try to persuade consumers to buy what the firm has already produced, but rather to produce only products that they know they can sell, thereby satisfying consumersâ needs and turning them into loyal customers. 3. The impact of technology on buyer behavior relates to factors such as ____; the use of technology to engage customers and build relationships; customization of products and promotional messages; and better prices and distribution.