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RATIONAL EXPECTATIONS AND ECONOMIC THEORY : We assumed above that the role of economic theory is not to provide quantitative predictions about the future. Suppose we assume ins
Define the returns to scale in production technology. Returns to scale in production technology: Assume that we are using some vector of inputs x to generate some output y a
Technical Economies: They are economies that accrue from the use of large machines with emphasis on full utilization and efficiency in production. First, there are some equip
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Factors of Production : The factors of production are the resources that are essential for production. They are usually separated into 4 dissimilar groups: Land - all natu
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In June 2009, Textile co. (a domestically located firm) purchased 1000 yards of cloth from India (a foreign country) for $1000. Textile co. hired Elizabeth and paid her $5000 to s
Terms of Trade: The ratio of average price of a country's exports, to average price of its imports, is its terms of trade. Theoretically an improvement in a country's terms of trad
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Question: Product differentiation and entry/exit Two differentiated goods, apples and oranges, are located at the two extremes of a linear product space (a segment of length 1)
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