can use their profit to invest in new products and technologies that benefit consumers in the long run. e.g. oil companies who find new sources of oil 3. Monopoly Firms are Efficient An argument popular with economists of the Austrian School of Economics is that firms who gain monopoly power are invariably successful‚ innovative and efficient. e.g. Google have monopoly power but who can do it any better? 4. International Competition A domestic monopoly may face international competition‚ therefore
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Returns to Scale Meaning An isoquant is a firm’s counterpart of the consumer’s indifference curve. An isoquant is a curve that show all the combinations of inputs that yield the same level of output. ‘Iso’ means equal and ‘quant’ means quantity. Therefore‚ an isoquant represents a constant quantity of output. The isoquant curve is also known as an “Equal Product Curve” or “Production Indifference Curve” or Iso-Product Curve.” The concept of isoquants can be easily explained with the help of the table
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that in reality utility or satisfaction cannot be measured cardinally‚ the satisfaction obtained from one combination of productions can only be compared to the satisfaction obtained by consuming another combination of products. * The indifference curve approach‚ was then introduced which is based on preference hypothesis ‚ that is if the consumer is provided with various combination of goods‚ he can put them or
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EC 3101: Microeconomic Analysis II A/P Indranil A/P Indranil Chakraborty All relevant details on EC3101 are in the syllabus The morning office hours on Tuesday will start from the third week of lectures t tf th thi d k fl t Important Highlights Important Highlights • Text book: Intermediate Microeconomics: A modern h approach by Hal R. Varian (8th edition) One midterm and one final exam Please do not email material‚ lecture or exam related questions. Post your questions precisely on IVLE Forum or ask
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School of Economics define the indifference curve as a graph showing different bundles of goods between which a consumer is indifferent. That is‚ at each point on the curve‚ the consumer has no preference for one bundle over another. One can equivalently refer to each point on the indifference curve as rendering the same level of utility (satisfaction) for the consumer. Utility is then a device to represent preferences rather than something from which preferences come. The main use of indifference curves
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c Samwel‚ M. Phil (Economics) Moi University. Chapter one 1.0 Introduction Economics is the science of scarce resource allocation to meet endless human desires. The modern economics science has two major branches i.e. Micro-economics and Macro-economics. Compared to micro-economics Macro-economics is a younger branch of economics. Until the economic depression of 1930s economics was limited to what is currently Micro-economics. 1.1 Economic Models; Economic theory aims at the
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University of Toronto Department of Economics ECO 204 2011 - 2012 Sayed Ajaz Hussain Lecture 3 © Sayed Ajaz Hussain‚ Department of Economics‚ University of Toronto‚ STG 1 Lectures 1 and 2 .. Method for solving unconstrained optimization: max �� �� �� The Envelope Theorem Lagrangian method for solving equality constrained optimization: max �� �� ��. ��. �� �� = �� �� Kuhn-Tucker method for solving inequality constrained optimization: max �� �� ��. ��. �� �� ≤ �� ��
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show that‚ if a consumer prefers more to less then his indifference curves cannot cross. 2) Suppose that current and future consumption are perfect substitutes. The indifference curves will consist of parallel lines with the negative slope m‚ where m > 0. a) How does the marginal rate of substitution between current and future consumption relate to the geometry (i.e. the slope and the intercept) of the consumer’s indifference curves? b) Given perfect substitutes‚ is more preferred to less
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student athlete playing golf I am constantly juggling my time between my studies as a senior Economics major‚ and maximizing my golfing potential and chasing my ultimate dream of becoming a professional golfer. Throughout this paper I will explain how I maximize my utility in different circumstances using the labor-leisure model. As I am not actively looking for work in the labor market my indifference curve is so steep there are no tangencies to my reservation wage‚ which is defined as the “lowest
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attainable indifference curve(tangent to the income budget line or MRS = |w/p|). At this point A‚ the individual will work Ls1 hours‚ enjoy La leisure hours and enjoy an income of Ca. Assuming the individual has attained a source of non-labour income‚ for example inheritance or lottery winnings‚ represented by vertical distance ZX on the graph. The income budget constraint will now become a kinked line KXZ. The presence of non-labour income allows the individual to reach a higher indifference curve and
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