ECON-1006EL Study Guide - Final Guide: Variable Cost, Marginal Revenue, Economic Rent
23 May 2018
School
Department
Course
Professor
Final
Questions
1-ch1
2,3-2
4-3
5,6-4
7-5
8-6
9,10-7
11-8
12,13-9
14,15-10
16,17-11
18,19-12
20-23,13
24-26-14
27-30,15
31-34,16
35-37,17
38-40,18
1. What assumptions do economists make about households? (Chapter 1)
2. Pick the normative statement: (Chapter 2)
A normative statement is a statement about what ought to be as opposed to what actually
is. Examples of normative statements include: The price of milk should be $6 a gallon to
give dairy farmers a higher living standard and to save the family farm.
3. What determines goodness of a model? (only thing look for in a model) (Chapter 2)
The goodness of a model is determined by the question of which does the theory predict.
4. DC & SC shift, how does it impact P&Q? (Chapter 3)
9 cube diagram
5. #s in table, calculate price elasticity of demand. (Chapter 4)
find more resources at oneclass.com
find more resources at oneclass.com
6. What is relationship between elasticity, price changes and total revenue changes?
(Chapter 4)
Elasticity of demand equation:
•
•
•
• inelastic:
• elastic:
7. Diagram S&D, price floor or ceiling imposed, what happens? (Chapter 5)
Binding price floors lead to excess supply, Binding price ceilings lead to excess demand.
8. Diagram S&D, pick the area showing consumer surplus. (Chapter 6)
For any unit consumed, consumer surplus is the difference between the maximum
amount the consumer is prepared to pay for that unit and the price the consumer actually
pays.
9. Marginal product and average product curve, explain behavior over ranges of output.
(diagram 7-1) (Chapter 7)
the relation of output to changes in quantity of the variable factor (labour) can be looked
at in three different ways.
MP is at max where TP is the steepest
AP is at max where MP=AP
10. 4 diff cost curves, which curves are which? (Chapter 7)
AFC,AVC,ATC,MC
11. Vary amount of capital and labour, what is the optimal level? (Chapter 8)
Whenever the ratio of marginal product of each factor to its price is not equal for all
factors, there are possibilities for factor substitutions that will reduce costs (for a given
level of output).
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
38-40,18: what assumptions do economists make about households? (chapter 1, pick the normative statement: (chapter 2) A normative statement is a statement about what ought to be as opposed to what actually is. The goodness of a model is determined by the question of which does the theory predict: dc & sc shift, how does it impact p&q? (chapter 3) 9 cube diagram: #s in table, calculate price elasticity of demand. (chapter 4) (cid:1842)(cid:1857)(cid:1870)(cid:1855)(cid:1857)(cid:1866)(cid:1872)(cid:1853)(cid:1859)(cid:1857) (cid:1855) (cid:1853)(cid:1866)(cid:1859)(cid:1857) (cid:1866) (cid:1868)(cid:1870)(cid:1855)(cid:1857) =(cid:1843)(cid:2870) (cid:1843)(cid:2869)(cid:1843) (cid:1868)(cid:2870) (cid:1868)(cid:2869)(cid:1868) : what is relationship between elasticity, price changes and total revenue changes? (chapter 4) |(cid:1866)|=1,(cid:1873)(cid:1866)(cid:1872)(cid:1853)(cid:1870) (cid:1857)(cid:1864)(cid:1853)(cid:1871)(cid:1872)(cid:1855)(cid:1872) inelastic: (cid:1844) (cid:1842: elastic: (cid:1844) (cid:2869)(cid:3017, diagram s&d, price floor or ceiling imposed, what happens? (chapter 5) Binding price floors lead to excess supply, binding price ceilings lead to excess demand: diagram s&d, pick the area showing consumer surplus. (chapter 6) Mp is at max where tp is the steepest.
