Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Inverse Demand Function: If variable factor prices changes, then the isocost line will tilt and consequently, the optimal factor requirement will be different. Suppose the wage rate of labor is allowed to vary. The resulting locus of profit maximizing amount of labor is referred to as the inverse demand function for labor. It measures what the price of labor must be to get certain units of labor, when the level of the other factor is fixed.
• Expansion Path: This line shows how the factor combinations utilized by a firm changes as it expands its level of output. It is the locus of points of tangency between the isoquants and isocost lines.
• Price Factor Curve (PFC): Holding total cost fixed, factor prices are allowed to vary. If e change the price of L and hold the price of K fixed then the isocost will tilt. The locus of optimal factor combination points is known as the price factor cost. Note that this is the long run equivalent of the inverse demand function.
• Effect of Change in the Factor Price: The total effect of a change in the price of a factor can be divided in 2 - the expansion or output effect and the technical substitution effect. The output effect refers to the changes caused due to the alterations in the total cost. Technical substitution effect is the result of the change in the relative price of the factors. This is similar to the effect of changes in the price of a commodity that we mentioned under Slutsky equation.
• Expenditure Elasticity :This measures the percentage change in the factor used in response to the change in the total cost. If this value is greater than 0 then the factor is superior, otherwise it is inferior.
Positive versus Normative Economics Positive Economics Positive economics considers with the predictions or observations of the particulars of economic life. For instance:
If the price of that cup of teh-tarik has increased in such an amount,economists may not necessarily conclude that the country is going throungh inflation.why is that so?
What is inflation gap
1. Moving from an economically inefficient to efficient allocation of resources will necessarily increase benefits by more than costs. 2. There are two demand curves for a pri
Cost in the Long Run Cost minimization with the Varying Output Levels -A firm's expansion path shows minimum cost combinations of labor and capital at each level of output.
choose a topic from microeconomics that matters to you and find a recent news article covering that topic?
Mediterranean Regional Project (MRP) Technique This technique had been initially employed by the OECD (Organisation of Economic Cooperation and Development, Europe) to prepare
Suppose Jean Splicer, an investor, buys $300,000 of shares of stock in a diversified bundle of Bio-tech firms and exactly one year later sells those shares for $315,000. Assume the
what is fractional reserve and how does it affect money supply?
Assume that milk operates in a perfectly competitive market, use a well labeled demand and supply model to explain how market equilibrium price of milk is being determined.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd