AREC 202 Lecture Notes - Lecture 18: Marginal Product, Production Function, Variable Cost

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chocolatesheep405

28 Oct 2016

School

CSU

Department

Agriculture + Resrce Econ

Course

AREC 202

Professor

Stephan Kroll

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Document Summary

Thursday, october 27, 2016 chapter 10 cont. and chapter 11. Marginal utility, the substitution effect, and the law of demand: the substitution effect of a change in the price of a good: The change in the quantity consumed of that good as the consumer substitutes the good that has become relatively cheaper for the good that has become relatively more expensive. The income effect: the income effect of a change in the price of a good: Change in the quantity consumed of that good that results from a change in the consumer"s purchasing power due to the change in the price of the good. Chapter 11: behind the supply curve: inputs and costs. Marginal product of labor: the marginal product of an input is the additional quantity of output that is produced by using one more unity of that input. In other words: with diminishing returns doubling the input does not result in doubling the output.

Related Questions

Which of the following that will occur when the price of normal good falls?

a. The income effect and the substitution effect will work to increase the quantity demanded of goods whose price decreases due to an increase in purchasing power.

b. The income and substitution effect will work towards decreasing the demand of consumers because the purchasing power will relatively decrease from the fall of the price.

c. The substitution effect expresses that the sales of goods whose price rises to increase.

d. None of the above.

periwinkleraccoon191

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.

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AREC 202 Lecture Notes - Lecture 18: Marginal Product, Production Function, Variable Cost

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