the average variable cost b) Marginal cost is smaller than the average variable cost c) Marginal cost equals the average variable cost d) None of the above 6. The difference between the average total cost curve and the average variable cost curve gets smaller at higher quantity of output because a) The average variable cost is a constant b) The average total cost is decreasing for all output levels c) The average fixed cost is decreasing as output increases
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when x1 > 0 and x2 > 0 so nonsatiation is satisfied. 1.1.3 Implications of nonsatiation 1. If utility is strictly increasing in both goods then the indifference curve is downward sloping because if x1 is increased holding x2 constant then utility is increased‚ so it is necessary to reduce x2 to get back to the original indifference curve. 2. If utility is strictly increasing in both goods then a consumer that maximizes utility subject to the budget constraint and nonnegativity constraints
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Define and explain the use of indifference curves. Why are firms increasingly sensitive to the application of indifference curves in today’s economy? How does one construct and interpret indifference maps for purposes of corporate strategy? Define and explain the use of indifference curves. “An indifference curve illustrates the various combinations of two goods [or groupings of commodities] that would provide equal satisfaction.” i Therefore an indifference cure is a way to graphically show
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In microeconomic theory‚ an indifference curve is 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. A budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within
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HW 1 (1) Draw an indifference curve map with the quantity of pennies are on the horizontal axis and the quantity of nickels are on the vertical axis. Given the shape of your indifference curve‚ how would you describe the typical relationship between these two “products”? The two goods are perfect substitutes for each other. 5pennies are equivalent to a nickel. (2) You and I are in consumer equilibrium. CDs cost 10 dollars each and cassette tapes only 2 dollars each. I consume CDs and cassettes
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Definition of Economics: The Economist’s Dictionary of Economics defines economics as "The study of the production‚ distribution and consumption of wealth in human society." The 1828 edition of Webster’s dictionary contains that could still apply today: "Political economy‚ the administration of the revenues of a nation; or the management and regulation of its resources and productive property and labor. Political economy comprehends all the measures by which the property and labor of
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(human resource) being demanded and supplied at a particular price (wage).Labour supply is frequently represented graphically by a labour supply curve‚ which shows hypothetical wage rates plotted vertically and the amount of labour that an individual or group of individuals is willing to supply at that wage rate plotted horizontally‚ The labour supply curve for an industry or occupation will be upward sloping indicating a positive relation between wage and labour supply‚ increase in wage rate leads
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understanding of what lies behind demand curves and why‚ for example‚ demand curves almost always slope downward. The utility maximizing model is also crucial in determining the supply of labor in Chapter 14‚ general equilibrium in Chapter 16‚ and market failure in Chapter 18. So play up these applications when selling students on the importance of the material in this chapter. Section 4.1 focuses on graphically deriving individual demand and Engel curves by changing price and income. Section
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weighted portfolio investing in all three assets and the return of an equally weighted portfolio investing only in assets 1 and 3? 4) Consider investors with preferences represented by the utility function U = E(r) − 1 Aσ 2 . 2 (a) Draw the indifference curve representing a utility level
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Chapter 1 NAME The Market Introduction. The problems in this chapter examine some variations on the apartment market described in the text. In most of the problems we work with the true demand curve constructed from the reservation prices of the consumers rather than the “smoothed” demand curve that we used in the text. Remember that the reservation price of a consumer is that price where he is just indifferent between renting or not renting the apartment. At any price below the reservation
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