MICRO-ECONOMICS ASSIGNMENT Q(1) Explain and illustrate with diagrams the differences between diminishing marginal returns and decreasing economies of scale and cite causes and examples. Ans. The law of diminishing returns is also called the law of variable proportion‚ as the proportions of each factor of production employed keep changing as more of one factor is added. The law of diminishing returns does not imply that adding more of a factor will decrease the total production‚ a condition
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therefore be defined as the point/price where demand for labour equals the supply of labour. The theory of marginal productivity of labour states that demand for workers depends on their marginal revenue product (MRP – the value of the physical addition to output arising from hiring one extra unit of a factor of production. Where the MC of taking on an additional unit of labour equals its marginal revenue product‚ the equilibrium quantity of labour will be established. The MRP theory suggests that
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(who could sometimes have hundreds of slaves) were at the top. Even to the nonslaveholders‚ slavery was an important (though not necessarily good) institution. Hinton Rowan Helper would not have argued against slavery so much if it were truly a “marginal” institution. He argued because it affected his economic and social position in society. George Fitzhugh‚ a southern slaveholder‚ argued for slavery because he‚ as a slaveholder‚ was affected by it. Every person in the south‚ from slaveholders to
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The cost of a product under marginal costing or variable costing includes only the variable costs of making the product. The variable costs include direct material‚ direct labour and variable overheads. Variable costs per unit approximate the marginal cost of making another unit of a product. Selling price minus variable costs adds up to contribution. Contribution is the amount of money available to cover the fixed costs and afterwards to contribute to profit. The fixed costs are treated as period
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Economic Output – Ameer Zaharuddin 1. Discuss and explain what effect a reduction in the marginal propensity to consume has on the size of the multiplier. Answer: * C = c1 + c0 YD Marginal propensity to consume‚ MPC= c1 * Where C = Consumption‚ c0 = intercept‚ YD = disposable income When a reduction in marginal propensity to consume‚ consumer disposable income is low‚ consumer does not has additional dollar or ringgit to dispose‚ a degree of decrease in disposable income is likely
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Chapter 10: Savings‚ Investment Spending and the Financial System 1. Given the following information about the closed economy of Brittania‚ what is the level of investment spending and private savings‚ and what is the budget balance? What is the relationship among the three? Is national savings equal to investment spending? There are no government transfers. GDP= $1‚000 million T= $50 million C= $850 million G= $100 million Investment spending is $50 million. The budget balance is
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expenditure depends on the marginal propensity to consume. The marginal propensity to consume (MPC) is the fraction of a change in disposable income that is consumed. The marginal propensity to consume is calculated as the change in consumption expenditure ΔC‚ divided by the change in disposable income‚ ΔYD. That is: MPC = ΔC ÷ ΔYD The extent to which a change in disposable income changes saving depends on the marginal propensity to save. The marginal propensity to save (MPS) is the fraction
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Questions in macroeconomics Instructor: MA. Bui Huy Khoi Chapter 1 What is economics? Top of Form [pic] Question 1 Resources in an economy: a) Are always fixed b) Can never decrease c) Always increase over time d) Are limited at any moment in time [pic] Question 2 Human wants are: a) Always fixed ) Limited c) Unlimited d) Likely to decrease over time [pic] Question 3 The sacrifice involved when you choose
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economic ideas from those of the classical model to one of a more hands on approach. In his book Keynes speaks to three main ideas‚ the propensity to consume‚ the state of ones liquidity preference as determing the rate of interest‚ and the marginal efficiency of capital or the anticipated return on their investment in capital assets. The propensity to consume is one which we use most in our everyday lives and one which involves the least amount of uncertainty. We all use our money to purchase
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Economics2 CLASSICAL THEORY -The classical theory of employment is grounded in Say’s Law‚ the classical interest rate mechanism‚ and downwardly flexible prices and wages. -The aggregate supply curve is vertical at the full-employment level of output; the aggregate demand curve is stable if the money supply is constant. -Government macroeconomic policies are unnecessary and counter-productive; automatic‚ built-in mechanisms provide for full-employment output. KEYNESIAN THEORY
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