@ ide ‘4 Lo2 ow Ch pts } and X $1 Key economic peoblees — uolintted war > scncit Innit Kesauces eT 3 Fundemenral Economie Queshons Wher 4 produce” 2 2) How 4 produce” 3) or Whom te > reins Z Economic Systems 1) Tadisional 1) Command. = gpvernment planners 2S Communist nehonS w 7 Note “Mixed “econan is a blend of there Sconomic Systems, 3) Marker economy —gelies on price, markcer, ar! propechy Rights (ownership) Adam Smt “invisible had” - Wealth of Nahons people pursuing Trew own self-interest Cesults inthe, io society. best outcome. —auides tne marker tothe bese social accom?- (‘paue® rob yen 480 ster) dn seG Bp pengod Bowe st qbar zie my S08 jo Komendlo on oS a7n10yo v a +52) 0 so pubyap rywusayyo 4529 HOY — +3nyng 24 py yiod soypoun ap 200 SO +507 AyunpJOIIS vo St Vt OC 2s\> Cuyyowos 4° ss>| Burompa.d aroun Bsus BVO sonpoxs GU YIO— 32 !t > vauonpoyd payte> syo @NIND ayy 00 syvley xe 41) Copa — o(Gbojourpar Pre sornosed Coase ese syioy ayqourspgo 4o0 2 S “xd BS‘ aamnn mH F ee varnyya p25n 42u 40] PY? patodwoun 290 sorsnasa) PWOS— FSA SAMOy Saggarl 4 aMImotqe VO 9 % Sere OW 2 PRAY . noe Pm Cywaryye 5772 — Gusn ave VO BAMAAC io Fropurag mu FO serey 7 sop C- ee s DAY! S804, VOM yee RETOOL FMD Gre°®. @ ay Sed pe (What's the Opportunity Cost of Sng from pt Gr Pt C2 (use graph on pros pape) oting needs te be given up; re efhuestly. The answer 1S ZEW as vi resources susr need ape employed moi he Opporunty cost increases aS We move ? oun Whe produchon possilalthes frontier. Whey 22 —due to Cesources nok bag equally suited jowards produany both products —this also explains the bowed out nature Of the PPE _ Cound tt mean if tee PPE wor hinew as belo? Good & — Constant opportunity cost —CesouRces Loud be com pletely adaptable to alternate uses Cannd A ¥ S20 Donk AP BIed Jago UE Af byvon’ aap Pep op Ger i) pupan paw dd Me oF 28 voy 42npoud ApGqyiond my bran voyrosayo in ow yenpod evo ‘ >} wre gh yee) ow ju a fl pep p7 OY Low nob “yay zak WOE PMO = way vo 9 pan svow | Baye 4 pas teenedlo 24 - Boy (PU gonpasd we 4047 ayo | —— ——n, oF of dn ane of Sym 5! qpumnsye) 41 -A9B yor By ashore 9224 2 * siya essyeP ot SF “yg'g ar? usd panyn 4529 ar a4 sn @) asad pars? voympaxd 24 sn) Dp 2p SURGPLOD om. ayy? Dayv20\| 0) yn0d THF PaaS A parte? 5! uted She Frou My St AM vied SO Goo 5 YL, “qeepys? snk ae Poy DIqo2'SP \\O aqqreP ou 20 Sy yry HENS DHE eyred 21DYyD YOMDMPCRY sh Of Be WADIA FO2M0SHY}Oey 3 —_— 34 Economic Growth Economic Pwr (Udhat enables us to produce mone sn the fare? \) betwee technol ogy) 2) Im provellzleog farce (oerer educated) or more workers 3 more machines a Suppose. consumer goeds and : Capital good (machines) afe (oo) produced. WhIdr poist, or B, A would enable US te produce pore next year? Consumer Rowe S in Good PB as more machines produced ths year wi! ensble us te produce mere neck yen “This would cause the POF Cunle to Shift oucreasd tothe, Ryt as Shaun Weee-sparnten Ging 42U 2120 cormora) so Jd Me aprsys eed © M4 $508 Pye IML dd yp sooty 8 Bop qawhoidwoun wy 22 VY aio) 0 K sonjay 50-4 pyran gig, mak OEY POF 2 emganpoid my Gyo 1 soneudwt Cho ovypo asoddng **Q “ano af qed pva 2v0 Syo 254 arerssod osye SU AT sou WrIINY SS: BUPAP PWOVOID ce pre! AQVB asye VED “4d ‘A ee dom Prpag spoo8 sownsvoy Feay 2° suoats 4p Snpay. cpa0® yrpideo 2u0W. ponposd BO Lso Soa, fod oe a St yiresb riwovord sy) Sse Ro@@yery__ 3-5 Sgectaltration and Wade Seb Countries may choose Y0 Specialite and produce so thet they can trade. Certain products K Comparative Ndvartage™ when one can perform an Z Ackwity 9 produce a good ate ~ basic. concede lower opportunity Cost than way trade cists lower Opporhuarts CO Someone he. Arbsolute Prowantage: “one nahon Can produce more Outpt (using the Some, Fesour as the other, one is more produchve than anather person im severa\ (or alt) activities, Ghuenthe teble tothe ight answer Yee Following queshions. © Who has the abysle advantage © The US. does in both coffee Shen, Th con produce more of each. ® \whe has the con parcive advarage & US. opporhuaty coat Rr b coffee is | whestand fir | sheet offee Brea oppor bans cast for | coffee ' Vawheat. and fr ae votbces 7, BAAN WS Comparave advantage in Coffe, US has iF in whos ( lowe) ere. cas Need +o compte opportunity Cosh2719 Sr suede seavayen sucaqhos Ut Popvenpe royoredwos Soy SN +5908 4409 vt Bongo amysy SoA "ST Lame | fan Baia JO [pOTes spyag 792 40 J24snq 2x0 | [74574 240 ponpedd ag auth say, so! saragunen ny P TP vagones E— Goaedived vay pent. cadre AY PY) say gh PO ay -2Bogvenpo ayo sedwor S04 aoe OPUS ME posererinac fore A pyres SE = + pbvyvene? pnyos0d wo? aut 4 i rend pres pe? BRYN 5) yyy 272" TUTORS OHO any po! (3 ‘3° ‘| vo suas *pyn) 4300 kyon s0ddo, 4vNVE AM PN oe soyoy save iassred vagemperd 4°29 ZO protiag aod © peas q SPyatne> HOT saan 2Ped | “yo 12] FR en Ory Sapony pre PHoHeNRA ae amyuedwer vero ayy vt Geriorrads Hg, Foe®Oyeoy. +H Su ol and Demand Yel Chott Supply and Demand Law of Demand - as Prue, Daarlihy demanded v A chonge. in peice e of a good Cesulls a Change in the quantity dewmdee faa ot Hygt good — provemen® along Jhe Semand Curve . eo are Factors Hat Cause the demand for a ‘Ther demand coud be che hi product 4o shift, These changes in aa \) income changes a) price of a (elated good |scevice changing 3) prefermea chorges 41) number oF bayer change S): Laure ee expectehons ° An tacrease in demand Luould came tre A J o eemand Curve to Swf RghY, feom D te ” » Q\[p008 ayo sof puruap et poo8 kiopuoweyduoo fot ‘p P008 say10 40f puowigp <=|, poo8 karmuowyduuc> fot ‘sama op 104 pus sop 1041 spyg280n post as rey Inq Aforemeas pstpund sue exp spoo8 — syurauraydauo> - DRT POOD POET IOs (c 4} poof s2y70 10f puowap <> pood anmgns fo. || Po08 soys0 40f puowape=| poo8 aningns fog sya paw sieBmqureyy "x9 snipo yoo o 200 ur posn-poo8 - saynynsqns - nq Bupye 2800) pure {UOIRONE YON —O Oe ‘ppuowap = | swoouy "POS 20H sa CL jpuowap <= 2uoou = spoo8 yeuuou - Lpupuap e= | auoous POE TS UU TT ASS PARR wT SHU STS TOT OTE ‘aroun Ang 0} Barua oottd yous we YB AHS 0} amo Sesto PuRMIP UL | poewop a4 soagge yout aouos/po08 ayy Jo ood amp ween soMRO soy WEAATaI AE OS SNP ~ sang puemog om uy yas = pueMag Uy aHaEE CoE, Sop ®@jdey #tapt #=Db ‘Companies need to consider demographics. ex. Beer manuficturers ~ may have problems inthe near future as many customers are young to mid-age males and then relative number of them is going to hold steady or even decrease over the next few years ex. Retirement centers 5) Brice Expected in the Future - ifthe price is expected to 1 in the future = D1 Note: This does not have a big affect on many products as many goods are perishable and people tend not to store goods. ‘Note: #5 above is not that important,Jf “gas wey eh tins oF 2M hgdus re Fi 3 ay atrog pynem fing v1 seca ug nud ¢s sobue> >oimas| poo pay 9 28 poo8 yo mud omeny PEAS CF sourya sradans 42 an cabuoya 071 G\orPr (z gp 2718 [SAD ( TS ot 0 2 \_ soon 57d {ao Airs 41 abo 10 pend YHh YEP PS mL gonpod 0 25 Gyddns oy 27> PE joy? >? sopra hers Py Evo 4vaWaNOWU — “p08 a puedes: quer aE 4 570d MHL bua y Ridms go OY At@ ahona vt S495 2) poob 0@ysey ‘Change in Supply => Shift in the Supply Curve = due to any relevant factor other than the price of the good/servie thet affects the supply ‘Tin supply causes supply curve to shif right; at each price willing to supply more 1) COSTS (Prices of Resources and other Inputs) — Tis what the supplier pays to produce the product. (ex. Wages, raw material) ‘Note: Distinguish cost from price. The latter being wiat is received by the producer. ‘The higher the cost, smaller the profi. Ex, Wages go up => some workers let go some factories close, hence supply falls Thus, Ct (his lef) Chast (his righ) Note: When either the demand or supply the respective curve shifts right. ~ technological advancements (which is what ‘normally oceurs) new ways to produce moreor eter products =>'S TY atost 3) Number of Suppliers~ More people producing, so supply increases. Hostsureyodun seq) you are aaoge cp pute pg ION ‘gu Jo uonanpoxd ‘un uy yuouno|danoo w sf uroara se ta ums pre tsox9 9q poo ofdurexa zaqnomTy = $7008 soo dof s<=4 poo8 Caomauajduos fod 4.7008 sao 1of <= | poo8 Ciowouayduos fod peo] pu wou sonpoud— nog x9 3042804 poonposd axe ita sp008 — opanposd uy syuouo[duos - | R008 oyso wof g<=> poo8 ainsusqns wouonpoud fog POOR sao sof Se |, pooB amyusqns uoyonpoud Jog sssindinoo dovysap 10 sdoydry 39 sous Jo 5 paw twa {Jo axons sonpoxd- wonanpoud uy soymypsqns- "1g wr as04 s2aeu © Bump £0 wez0 KE (ezzid x2) seoties par spoo8 ysout 303 yweroduat 000 0a sta “uoponad se yous xeU w UF EOdUH 2q Aout sin YBROKHTY “2ION, 814 sod ‘an woe xptourrxou azou os pe ono prot ot ax pmo sures ‘mp “qjuouryx0u da of oy sr aoud amy payoodxs 31— umajosiod hopoi) 5 4 orpmeadsa saoud amy ast = (po) 4.3 | poondsa sad amy a9 31 ~ 4@jely Equus term prize Lasay Why OS=QP, 50 + $10 ent ae D0. pry 813 there wa Sucplus ot 2O as YS7QOOD eee fs 8b there 1s a shortage of 20 as @D>QS, TS Bin Pin denad > PTs Qt MSY (as com be Shaan on gregh bE oy) iw Tn su goly —P Py aw OT eflecr that Symultanesas Changes in Pn We can examwne the J demand hve on The equilibrun pate od quanhhy + Suipely On Change ia tora Ounge nSety Sf © Trecesre Tacreae. r @® Vecrecae. Decrease ° © Treeac Decrease q Tacreare v @ Vecreme Nove: Y pe untethain Denende une the 696 at aenn Pen sono peep 3 soa eco Jo quer wanugyynba om pe asoayo wa.0 0 aod wamaqginbo x soreaour 89 sonpout 0} posn sory ‘nog 3 ata ay ep asoddng“spoo8 Kqusuoydws ar osoays EDD puE SBE “— JI pepanany Aun a sabe nun J pas Ann = ‘UpsevarsUT we O} spray ssyeM payeuogted Jo aBeUOYS 3 pou oo 2 sma a Bop 1 pe POR 1 oe S200 O95 WO reed an sonnei mio ing oy sna ace oe ela “ty Semw 06 voy suoqgota sonresg sonD oda puewoa pus Aiddag Gney}, Wow airboy Baa oh ' ®@jaes ChagterS ELASTICIN Elastic = Cesponsive +o changes in price 9 Peice elastict® demand E= To in QD _ measures hus TE Qo. OS rin Perce ok & good changes duc te hao i 1 = \-os te ac The Onange to AEE B = He oe — — = os? Cage P foe u o Cesponswe how pre TE ED | = laste demand Te E=) Sunt elasth«e demand “aah resgonnwe 40 Ain price, Th F< | => inclastre demand ? r) © || @ ® Ese Rerfeoriy Perfeorly Blase Oemand Tne loste Dero 2K 2. Sade machines ex: insulin, ESO ext 2 each OferSDUpSWIaUL SI EL mp — DYSO] D> Si At DoT — ToMsmia wun gi any prowop Jvaut| Sve yo ywodpiw DY) BPR, ~ oysaja! Of ayysor> YS s20F — 6 Tay cmap >now “od SASF Serger ey are my MP ne su io \— ring aoavyy PEVMP eroul “OA Se 2S yp 40 si at & e b f IESE avy pa ee Y [ehhh = h | b |_; S sg pe) sd gp erty me \ 9 AUD My YING PYOMPP 3 al oy Kyrqwpo 1d ME ANINID eS {Rod PI ME A 3 oy amd ree se _ db =q , P88 ory, cds qov FQO35 Total Revenue Test Recall Revenue = pate ® quacks, Ue Kane teat HF PT, QDN. we can detrmne FT By observing Charge tn TR, Pow! @, - \ demand is elashe or inclashe. or how a pre change wil abferr Vora) Revere. 22 re PP ator at PV ord a hte, ther we would @peck inelasre (giver changed Only by @ Smell omow TRT as the denend woud be. = So yk we Krew Pay od were told that TRT, whet Could We sey ebour the geducts pce elashudy of denad e ans. TE PY oo TRI AQ wnat hue gore ue glob TTR, & elashe demand. _Grogs doy [22 mA res wo Guegaloy, Pe eae enema! ae yarn Dud +f — “H0hed 199 FR sudo 5S TYSoj2 Dud WH LH ME sonpasd 9 vo gods 2w79¥) 49 Voyadeud muy 22500) OM — Tprpeng ano RRS PG Ae VEN Ce 24s") nso) “EGSESSOU 9-40 Crary 9 8 9208 He BION D poosnp 40 Sereee[> A ayo 278 oe DAL HOM L(G hop mis 9 phy MY > * cant OND cag sa 8a) “Fay aA HpaII HY (lo SS 1 mp iy ae PTE a apo Sarwoyigp AL FOR Fw ppsr bene MH Deal BME L : a EG} WOW aay agrsHPS VOY a . Fs ATH | eA C Rime ge Roy sey MY MEPYT. By pay ho @ nS& @e , * Ovher Elashisties ) Force Elasberty of Supply = C/o a@S DL aPrie Note No clsalute value Sign jar Phuc eper @SM, 20 syn 15 pasrhre: fo betoc, FEZ] -eleshe etc, ° 1) Tocone Blahdy ot Dowd = ha@P 6? Se & tacme Nok No dosclute Value sign Lacd here ay we Lak 49 Wray the 815>> Normel good — Income od Dered mac wm Sone dveechony SEP = pout ume ° Ee 71, income elashe vntame J © O Poveg 4° Kose a say spavn\dwon FL O< Poa 4° Geoyryg SU) OE EMENSANS + Bo patry F G0 Bis INN AMSAT AT romgroy boob 3x0 fo WY = pod p yselg@ va) SOIT) E FS er)Sechiy G2 6.4 Gl of Mar\tets Sjsay Chor 6 Efficacy D=eMse S= MSC Consumer Surges = max pice nme) pace Comumer Willys nn Qchastly 4o pay (M88) pad ackatly received sell (MSC = Copsuener Surplus + Producer Sarphas The. agai Heciaen point anoxior2es total surplus. Ty is he allocated ef huey poisty hesk Fir society. Jak Consume surplus or producer SNS enctcifirad, Only Hak tstal surplus 18 at epuile ph.Colas» prowap >¥r0\ avi Gy42ay 0d 0 St Duy el¥h (pzompad 0 Mgoq Keo. ) “s90| 41S'mpesp s0/puo SMS RenWoD UI voymp>) O sasnod +I ‘voysnpaud ono Je - vor npod apun sya youl vo wat Hinson trys snidyns jojop VI ateasI2p Suz ~S39] PAPO Xx he = TJ Watts 40 9290— Ss pS 5) h = Veer 4o 300 9h Tt Sor MAUD AE TMM [kn pores eA (sks2 : smin¥ 2wrsvod (9 my sam GeO +0 rons oO s ayer 9 50 Gees sey yr PVE WO ISL $a SL Ged fg Leo VAL Sumsand oydod — Gvwz00G yo ajo papet| — Sura —ZISSO| — FEET PN Fo HRM, POS ev@yy Refer +o the groph om the. Pror Page. A) Suppore producer is lmied t+ @=2. Were uscd be undegprediichon od the P.We Le Wodd be He arca of the telamle from Q=2+ RY Ure equ. quentey) and behwei tre 5D Curves, That amout would be the deadwesh> loss. \y) Suppose preoduchon war increased @=6. There sould be ouergroduchon and DWL Would lee he afca of the tRiengle beter DY (quit Gur O=6 ad he S*QD cuncs. See pone \SF yn Your tert book. - Faure ObOE Teese haus eS wl hed Bas elias 2 f3op oSmosay (2 |p 41 # g wha = ssat 122m erap (P 101 9h 9 vnSo) — Eers aeepead sper (2 IsWed wy ves — Geyoay irneddns owrser syoyer (5 9-41 5° £ peororns LAE e nro fn wot ir asW=S WE SPST MU “asd % S od accped your srt9 (4 cog SANGO sear or veg pi (OEIC of (2¥ 2X cor 5p2| 54 a (aR © of 1%] 9! Suypaye Ho ayo? yore? 48) SS potud umugh te me “9/24 gas my gree SARS Ast We2 ary ean r 4h — svoay 4 2716 S seme P7b24 sboyyye7 274 _ 9a Voywansayy TT 4,00C) MD t . pS ite SPAN aOi Price Floors — lowes* \egal price Tice K-tw be effeche it mest be Set above — Fane Yhe equilitorive price. ex TE ni niemuen Og j agacultwel sueppoets — note? hoscholds su poly ; Gems demand anole’ J under producbinn Surplus Yobor Puneetpeo so eh 0) 20 A gm d27S agp Shing pe vasa ™Mr ay hetsans o shod ausanoe) es Tyan pd wae vo s\ wt M™M 8S sapddns, aud wo spin poop SmdINS ME shaq a s208 HE poy toy 7220 yy 24 fou 520P season mt 50 BAGS vw st wa IMM ahoer wrwtviua 4pion BMY) eksechenB.\ + pryenelrereive 3-) Oya Chaptee © TAXES Tax jacidence — the divisier of the burden of a tax between the buyers Ond The Sellen When oa product is taxed Hrece ‘sa verkeal shranslation of the Supply Curve (or demand curve), ~The supply Curve toould shift up by the amount «Ob the tox. Sucokar Gay hoc slr 0 95a decree of $5. yee awa The gret= _ rand np (AIO we on se erste py cre 08 + cor ipa ‘eeeD par aus $10E—ap rene OF $5. the search ys $5 per phe Nok? S=MSC bath wrth ad without the tax.Ovavyyort yo s2jorp veyed — soe Boy 408 550) OPP — Ry porzaite> Son FI 9. pmaee) x OR” Maye! vt sa sed xa S sanyen GupyedsQueD Day py PUP __ ariel anne te oy omip of 204 pyrem “OE tO a Ss P % Cod punivoy of poh Shed ermgexd pre 909 NR on ped pie! 09 hh,” ud ou Oh=zonale ye = “Bor prov! wo, Mh LAAN (p amy me en ® \ eer S43 voy TPIS ME so PTE HE FAM “ts <9sw Q Gueownen Le on sero SW =S _ Kop [ge V wim 2247214 Qo 2-8 Sok@bent ez aga ‘otc Toal spl ene an of @ conser spn oon es) 94 @ predic pls le aes) est moma ponole, tentsado Day SATA, a ~ rap. 40 $50 Sod saprowog Reims TEBILS YOY |] op po os Bod 01 dds cx PIP UME A Co peop pve hyddns 42 Gy rsv\d_ ee aa PO oner4 ssapxe MH FO PUSS ME SUSPHV) Kap Mp SUIwIAP SIP +”) Ee EE SSS sya ev Ory Sy) OS so $504 wbrompoaP = vapsnq 5822%q 5-8 AloOye Regressive us Progressive vs Prpormael Taxes —avg. dex Care | —au5. 40% pate decreae as ays, tex rate increas af 1S Constant ay \ncome Woare jncreases Iatome decreases | Incrcoues i3 ME $2 dylys \P4I20 -w SE DSI PAE OS suampord -40U— soampord SYS oF 4509 ater Canosak 4902 i S=DW= Bs | yf 4509 pusape \wiSioul +. 940 =7SsW vowpra apa 44S M2 = Brood 0 ier. avi0u [voyntiod xQydey A 2 So querproduchin and dead weight loss cesults as Suppliers, wlout goveramest intervention » Consider SMC ad oor MSC. Wher can the. guveranent de? © emrssrons Ke or tox @ marieroble pores —Fiems buy e5e\\ permits thar guy’ issued € £* @opeoperty eight! Peconomvy Roald Coes Coase thesree Tm does nat matter te wham the. propeely gk is assiged © obten tha efRcier outcome if hore i “Small number oF people @® lore Hansacton costs E285 fr partes ts come tyethe, See goge 233- Rye 1:3"ah = gsr sug oA pak ue ours pump se my pawnqe? 4oUR of ARG - Ryowos SIE oh AYOYAQ, “e = a ee wi + adW = 3 S Ww yor \sapxe, \ridr0 PEK AAYISOY © ‘'b re GopOs%eg “ Lr loss Pese Hs So under preduchon ond deadweight 10s! “there is a Posrne eacternaltty wher thee 16 r6 DEMB and nor MSB- 2 acthons might The overnment tole. when government involvement aS Wher B- subsidy ~ payee Ap SetheR Suapplien 0& consumeR vo. w \ costs Y demond F ast | a — - Cightword ht > oe Nore Governed could abe rnide ths sod 2° Given varchar aatmt 4 deol wiv, this,asuajap wayau 3S +Quvanrt Ke Sreort eonyge Py spneid how spowte 200 asd WATS Py. % popynoscoapen ayo spoo8 254) ~ grag, Sah wren poo Gerad ore) \ 229) hy ogo seprog shale. on vosiad aw, PMY re yv220 vt YSU ~xS- DUOPM|Z2-VOU_ PUD (DALY ——SWWSOY, oe) xh maa ABV — spore) N78 ae) HMI ayqenpxevey pve HeNPEX> pve (PAs ~ 5p? Qos sev cop | HEY QVM ™Y flue pve ph 1200 eyavag MMe Golva — oy Bod asnw — ve __ << OL WOK Asan B9PP™ = amepnpx> -Yol\ 5S BIE OF - voy SOPH 7 » ere hao _— sco] sr me zxoryRPP LON HP \ > ™ anglan SOE) pry peg PHYO “Daranay TD PO SPH MVY O14 Dreyay Free Rider Prien (cont'd) Vighihowe. example. 0 roles From Sechon \0.% Hora Review he Tr dws exo due to one tewing Company free Riding, Ane. light houte coould nat be Tou ey The prvate market Quk the governmen*> cord use vis powers 40 tex and et 9 pe tex ge he lighthoue alk and obtain The fhaee ortome. Potente probiens Leith govermess inkerventhon here = Due tw voters Carona) ignorance (nok 4 aequive intormathon lect cxstsand bene Kis) specie! rests and lablyieh, the government er} Querprodure the, public good.(PAMAY! 005 EI) Quo 46099 42 Ch Coens ato wm) Ovd ea0yyD EF (sated seal Bagel “rogue Ge (08 rod) 214) wmqrSoo (; wang esmuday gyted SIM u d ree SAT APPS FP SOY eqynses grup gobeno young #1 Dg7DVIL = Syhel Waeh aieo ear Te = 9S as Doyo ~ey, Lomo 4rdgno 260s set Seo¢e> (ers so) s/290- \eeneppe MF MP 9a yp on0j24 SE BSW OD yp po08 mend o soy ory BH pape 28 ISH a Hog sasly MEY St 77 PONT SHON Garyyrvore “ay 2rd syoraond vary 32 rr H MNP a on eens 220052)? pvo 2NANO— ~ 49 voyaid2P ——= _ 7 = —— somrosay YOWWS saawey Op P POOL = 2 syee70 PUL v! ash x> 208 He SRB FO ARPPIPXe -VOU Pp \enva — Sownes>e feko so)Goon Eguilibnun Quarhty ad Prive ~ set S=D (Hc=8) = Gee od Fee ~vorthost got icterverton Efficiat Quarry a Price — Want MSB=MSC => Deeg ond Pe DAE” Pree absloned by ga%5 up Rom hep 2nd intersect the MPB cueve: So withue gut Cegulation we are Overgrodvers 0: De,? Qere SD over iting Resource and deadwerght loss exists ' 2 Sana Vahat con the govermmentdo. OQusta -veree\ Ine 5h 2 Gop © Peopeary Righas bet drfRue te ass ba hs Gez a21meg Jo poo’ ~0 40 Selene = : OD MY wna, OE LORD © AyoUAG |pkOh — CATA PAO] * DIAS 0 ps 0 go voydunnas 74h oR yah oued © 4p Voyrapsi4es ¥O HYO¥IQ = rn » pooBunyovo PPBALG popImp pee Wo 49 29103 HE — “SrTad SMPOPE © st 4300 Lywerueddo vo any 70 soupy GTR GIRERDS vo 51, ay Ferg ™H TP? Bog YL promgno— 44s (ayered 52x92 won : ® so[ P— prsoeand y pees 1? «wont yong PO vwenvo preejp] See prem an" ($ FART AE A OY een C5 PAPA \ suop VOD voted so wan owns no spr eng, 49 SHEA ONSdak @ydey- Mp2 Macainal Unity — how muck sca Uc Wiy is Gained Farm tne next unit cf Consumphen af @ good oF Sovice. Total uty generally increases and marginal ubhy decrease as more IS consumed Generally us Tu oF yo) MU Q Dieninishing marginal ublity - he gererd terdery for the. quandity of good Consumed “ Urstity Maximiring Rule (2 pocwnae Atel hy Yop Twooxs 1) AMocate- the entire available budget 2) Equate the margiral uhliy per dullar tor but, gnd IMU feem good FE __ INU Fem good 8 PRUE of Good FE — rive of good Bgy EE HE 49 px PH 40 MEL PPM — Lager on » See pw mad my Sine Fora, = frm sume POP AL eee $ Lean apyen AS oe-9 F Hur A poad-fo s3| Pw) 4} poh goad WY oy 208 40 HOS af ay = fms 7S Some aoe ATUL pyre HOD z panes § pr ¢ -g oot pg saps or OP aH ively Seg reeeny adc SH AD POaysey Chghl® Producer ard Cos “ Maia geal oF Fiem 1s moxie prot PROFIT ~ Economy. yeaus “Accountant Economies Piecouny = Rev- Exgher — Feyiee | = Rev. Explor Car Dege Cov or GF Nate Daas cat deduct normal prof Explicit Cost ~ costs paid in Hh es Selay, vert Tonplicis Lost ~ costs Yoeurred bar nak pad directly ake depteciton = normal prof Sunk Cost— cosh alranky incurred and has re influence on decisic Tore) Product = Tetal Ourper = @ — detol amount oF goods and Services podvead ina given period = PS an cokpud (ole ger unit of ne SE porhou or per day Sump) ity enodel by using us 2 inpits,-L (labor) Od % K (capital)spPeoxo soya PERT Si ary seer oy. 2q prom simpST BAT CATES FIM) 4O- \ Layyreon soIRSIS Dy go Hrpead Bow wy SPOS Jayv0en rewsppo vo yo npad (Brows ayevoyor— Fy Peay NTT POY TID vapor Bo 26s) ccrrreeeeeneee pe Gubovow pen 3° . vexporsjoraods pserted * op Ea t q snap M4 Ao WIN! af Ty) adxs OM — yogi, go wn Tf Guwya Cy cayrsa) apdaro yangippe Ym. Oy SUS = DW AW wen OT) OF Gis = aw = ROE (reseed) advo ase = OS! gL = Eopeg SL. RT SY VRAIS SEE So Dqorver) foxy > yey 250 yorde pw oqo] — = _ Paxyp sy du PRwen eq veo sade TTP aay +t “pe 200 of YSroud Gea} aw, 4o poured — ew fo paso — oy FT InVaA NIAMS eu Eee l@ayy we} The Law of Decreasing Returns as a Firmuses more of a varicble input, with a given quantity of Fixed inputs, the marginal product Ny decreases. of the varicble fap eventualpeys on, syo— spempad si pook mums Tf! passrou 5} 4509 rarnppe sree my MS — oy, DN = 2 W 427 Cou "AD jo ramon uby 42 UTD DLY Py mprouddo and DAY Mr YD 7 SMP DAV ss Cay tony re Day set aA DAU + DA = DAM APN a =o Goywrrpinn | poor (eserarP van pro wengeryPO785 of BAP) DAPI Grigaasvep Yoh FA, Gages uN vO ~ qe sarang se pays Ny — =p aa SA = OAN ~\ oer Cason vo 6 oO 54 7 DAV PPPINP st gegsvod © 50 TRUI|PPP — Goro 6-uOyaely hes dt ne Arc Ave QO (orp) Note MC tntegsects the ATC and AVG curves at they Minimum T AVC minimum is Pecched before the ATC mia. if Cech — AVE agproadhes the AIT curve ot hgh levels of Q (as AFC is voy smell oF hgh levels of @),pan 31 Ww (0, mS so1021m) grog OWS | Hoe] RO aus woid— ra « dy be SaiweoresTp oF yey eho ey Ysa 2Us 9718 Pe 24] = handy ab pej0 Sogcntgse09 gp Gey \o40D or BYLINE of 2PP— Puy r? 7, BIOS wD Gq mwa 4rdyro Ga owes | mGrl MY aus avy SET SP ROTP poy 72 2[RF go somone moyen HE YL wdero 4. Egy FUE od pre 2040| XS opdeo pre oqo} jo VoyTL Ids = \ #42\ 0 \ + mp Nod Pv” Io Boy v Gq, eosvaimt qndyno SH) — %, auis may paboidwo so} poe aus 4rd Qrsoayou\ — Fas PP BPHOTS (\ cay np sy, tper se shemp youre sede 908 Qrompord go 4509 sx fouls ward SH! Bom sory V4) “(pee aq yyoq, MOD J9qv | por Youteo os)aqyyen 2 HP [VO uns booy HT vu DME WEEE; @yey 9 Long —Ruo Average. Cost Cute (LRAC) = shows Tre lowest average cost that fiom can produce @adk input han it has ample hme to Charge \aber are! ples $2 v v derived” bs tracing The Incest shaertun ATC for ditleresr possible plank $12€5 Note? When ccononies of secle ane: presedt the LRAC slopes dosward (iia. gates ATEN), Wher diseconomesot scale are presest, th LRAC Slope Upward (Signifying ATC »). Long-run Average CosKortd yds oa P14 4veorq) 2oud Apoyo yp $e yen AL so Spal 59 [TPF wy Oy soysole Fyaoq/28— pprpod Soyp D4 78 powep PAL- Se a OS EL sponse pre REINS Mi yas SL 22 power 5! fo svayrasayyy mH wIA AOAZY ME 40 t jW=0= on s “= -54d228 dAy Spictacopis wi unsBarp 2 oF 2M Fo ode {rane ME St aay Svoytyadwoo soapod Joy +! xa {Raye OF gu2 7a OY — sgmpard (sremaboay) snr = Qawany y@ Cr 5 “syaqyos pM 50 hone Cow — wa Worstiaswos I5a4¥ad aD 0'®@j\e4 Nole* Fer the fem, p= D=MR ard all Boz are hoftwntel Kt for Perfectly Comperne Fon Economic Pro Cc conem\s Ve Seppo pare pr Comes Feeam Te Cwlhh, me Ave Max. Prokt x = peur = sex MR=MC we tas fated “Co up ftom g 4 < PAC cave we fod ATC % Since pr ATC economic prof. Days te Compute BE) youd (ero ym ayy Buk PY pac ‘eno 4s preys WUE O4 4 pr overtop aL ON) aire) PeP™S \ ay>d $9 $$0| vor De ee ne a ory wry aMPmrewe apd 7% 357] aI] L@Bye If perfec compestwe BOS p< FITC) shold he close. down” bas 1304 pias an |cononi& loss (re Need to consider ditch te if pr Ave | Stay open -as covey Vanable costs (and som Led cost9))8° Jose *© pzAVe, indi Ffere® 4° staying oper |elosing~ B Dy Paced casks be come vanable, costs wae OM ne? Py wim Prat: ae Economic pot @® Pr prne=P vm PHATE normal prof @As pmies below Ptwreisan lossjas P< ATC OD) ghog-eun —£ S—_ Yess by Sng? econome Sugy eure js trated ocr obout ee Men open 1 price. ave. Far the perfectly com| on > ond Py base clone. vb pres heathy compernie firans behste Fee pu WweSTAp de> Goapad may rp ves Boo uy vs 460K em Beyer 1204 Go onony Sel augst ayers 29020 hoes BHUP \NO TAETET rumyas TQOT PIT yun anvyuos pyran sm “VY MY po yon cy ew Af MF JO. AND Is yd 7D VO 40 yaw ay 4 Qyum pro mud au w payvas9 \\W sy “Soe y MMI aga] SHS Fedenc os 2XVus Pup BB op wsyy COU soma wyL to yyyed se tyed 2M0w2s Uy Med SL WML a 3? Cyuond © woh 4: arian Seas pve Tord og cameron’ MUL “9-42 Seam pur , gogo mud mo oH AA weup AH Eps ap PD POP ME SIMI POMP! savas VY ator ro gd TY Md eg os Lagiap a7 SL YE 9 99D somes) Reo spowe DY apnpord uy sey PAP ug ft alloy, prnomr 41m Lrg\dxe aborp aprsq-ons Sasyy wg sms map mud ay poe RAL Sky sy YE anyyadwoo Fyooped 0 addins, hek@. © To Keep ON Sconomie _—proWt px the Veg “Aen yous Loould need Some loarries * Sotny. — Bur such barries Ae entry, do nor exist in & awe are. perfeary compet IBpe This vs pod from tre Sociol perspeckve a5 he. Fem produce ak tre mriniaum ATC (udhidh implies thet called Tha ferent scale me) Fesources are not coasted), Th The perfectly compeive, marker produces at efficiest pot ( Msg = MSC) —no deadweg+ loss anc geds upwsapnd. Svrvana Th 22 vi pus — AONE VIPYES [ 2010S SE ey 2008 4vo.ahyNP 42 125.12? ~ cawagsna 42449 eleva BAPINIISIG 2244 @ counysg essed 2072 HP sooo 519 SH WO gedyna 40 44 Spe [PF ne — a arvd ews ME 40 IN TH IOG TmsaUMO (z samp DYYT PA PME p DOS = cap Ded JOE PINE? ey ene ayes _ vayr — hedovons ynpon #4 (0g 45 PPPS DN Bee0 oo wh von MET 0 anyve Mk Rua o © saen 0n008, cpap less 2001? ouy gonpo.d psompad grt SI 2Vvo— ya Joq my — orbwn — 1 ” FIOAWNOW hh Ko @ hlayy Siogle Paice Monopoly 3g ~For he monopolist, mor are demand fe The Finis product ono polis iy the enarler. IH pe? Ket demand 1 The Some as os tHe mM Two big differences bedver perfect compedhve Gorm od monopolst fen — Per feer Compeniive he = D=MR (for tre From) honzuntsl demand Cueve ond e —ADhe monopolist hes o downward slupias demon Dd Cunc and & Separate MR curve teh is below Monopohst Ase’ fe any wart Q 4o get the pri - _ atR ger the price Rec = MRTG goup te tre dena 4Q cuex (490) edo wag “dwoy Lom 224 sop eure D3 3d 4h mud aug ry Ayed ywou ouy } 474 vc) ry - ab Py — DW=Y PS = egsyodovo may MY pes St porn So MIS Mh ony anpyodwor Caray sd = ay youd yrivdxow of (rd pO ard Buse __ ap pasn 57m AM sishuy yi@oug oa fak@ -; Oyriy < 14-4 Ser MR= MC —9Wvs i -9e veal up e And AVC ancl e* Nok? p*>ATC 5 Economie. pat MC Recal mack ATC guaTher Economic graft - shaded ceckangle Nas id atc Nae! Rates! Lor gro mairtnahon xe the sent for ra perfectly congehtuve fem ord the sronogalist => sey MR=MC BY economic proht if pPATC b)rormal Economic proht p=ATC e)economic los if pc ATC2PM] DW Ym “y2eFAYI ¥E UE Duy YI EN marr iy murat Se Buy pup & pe ons PDB ay ot dn GuhGy GAN Bd pry pve Cyorpran dn 09 L pw =n +2 #° PY = WEIN 40S a sso] "Ove7> = va) paPMS aa suved BH ay! ort alee ? 50 awovere vio 204 Wu? FINO say anyadvan Genqind ayy ——s my is TON My of np [2 ya ap $I21I0Q, *Gqqodovews DY PO} By FYyUd wwov97F, RTI] DY vL opssed sy ayoud P1927? -gyasoy pron 38 (ers 0 pyo vanwp 5\, pd PHL yen Jaa prooy wu am yyed~? Gyaprad muy 2p youd Boerne amap yi voytjod wOD ins shy YY “pas on - eS seny, 12US " va op wig aneyeeve> Gysaj28 ME yoy, 25 aerssod St ye a Wwoudne Ma] ay Soh Geto odovow pu up Mt FSIObey HH p.G AL monopalish with 4 poral poht i ould be more of a Fluke. Me ATC is shifted dawn So That ye is tanger’, Lott the demand curves Vain vy he Some as Fr monogolishie competi ios Rass Me , pe ee ° mea e eaan a san yon voyyodwoo 432d say 531 Bram POOP. ou (osweasn) S=O cae mew os ompneosd so Hea adwor gnpiad “onadead osos Mh WOR — DRyCY vot pawdwoy Lyodovoyy po woyyodwo) 24 I2, -e 242% fheOey Paice Discriminator — Monopoly LH p.8 Sk Ted was a Sugle we lesked ak a monopol Previously ly — one Hat charged Customers the same pric price mono el for all unit s- We will naoturn 4 mnogo pRriong strategy coded price disecten ination we Charge differen prices do differea® custome he i Ame Same groducr \ies Phat Gam UE A def ferent ae Charge he Some. CLS POMEL differen’ prices fer ditferenr wats scrmminsle firms need Ws be atte Jo" To pace 3 ~ \dentty a leet 2 ditfers gegs willvyt pay citer Omourty — prevest ce-sale of product Goal Firm can make more profit “Increase. producca Surplus by teliig avoey Consumer Surplas The more he produter ean price di SCoiminele, The more prot it Con earn ded he and the more + world produce“B0] eyhiom poop 39 aq prom DAL PUS BSwaIVI prom pro smidins nev ag. $9 [10 GOO aye PIM 41 UI God eg Soty ven 39, pyran sawreven FOS $y UD HOME ME Gemares Sq ameApap wed Gad pr wy HST BOQ caasous sompox’ 4ssobevew MH perpmp 22nd vor 4}! so J2ma| St Sol arom vag Goorre SmdsrG IPIMSvO? Sayoh Sq) 544 grad ovo PH h- APMIIIISID oy hl . Cont coOye, _ Chet. !S MONOPOLISTIC Comeerzr ey to no | hvevted baeners 49 entey ducks nok \denrcel = pr = ache Frm enokces There oun Version ot The product = lots of Firms = good amour of competition 2x Clothing Industey j Fast food The demand an ne Some. as What 1S done fr monopolishe Ci 4 MR Yat we used for monopolies \s ompetes in he Shoer— Run+ The proft enax earring decision is abo Sea MR= MC and go up te the demond curve to ger the price and the ATC Pesmn a Ane Sone. be. So econamic prot Hr monopolistic Compethen auld be af below Econome proht af p> ATC =sladed tegion Recall min ot ATC hus 40 inkericet Mc Seep 384 Br cone geecieyd (oveuus . wo Seng ony dep "0H 97 °C eg voyyrdwen 04 Sopuny-Ral 24EY! 4yad yovsou. youd 11H101073 Roma amnap 9 204 OF Gyotovow © 24 2) BY PIM 4T 177 DYMO TAYE UU poys Tp Vi ead V4 SY OdeVOW PUD 4iledevow v voomyaq e0va.044!P pry au Gaon vado Foys Yt DN ZA 4h - sumo ys yh eee AY od 4 Crag AL pK suaigyodwon payed ap 5? sishovw aes ™MyE SN) + 501 40 vado Gags 41 PIMYS Coy dripped od aysyodovews 2 Uns—fUys HEME S50] WWONTID VP FL zat +7 vo Jap yy 525500 4 4 aay Ya = Wry seenGoy PMS aps! 9} 40 4FOWT plteks Fw FH POD aint suny—tJO4S DME VN vopyadwor sysijodovous 2a S50 DwoVerD COL\ = ces! Goh®@ydaly Monopolishe Competition with Norm) Proht Runcd Mew firms can enter 1Se3_ = Cohith Can east The Los Econ. Proht =O 2 Normal Prokt as p= At Normal Front Nate’ ATC ts drawn tangent tothe demane Curve, oF a8 where. % Q Meemc Seep. UL fe another geph Review Normal Proht for Perfevry comperrnoe firm —0eeall Rem is a pace reer Toarker Fico ~ Pertcer Compervnor Me 4 mC 7 ee Pl--- e p=d=MR vo @ Note Rerfeok com perrivn is efRcietr as produces at vs prin ATC Bus From alsouc with monopolishe compehitivn ure see nob a ims,OU S209 °7g oe MEDIA OMG A! AG - Sso] HOM poop po nud Difiy B40 ‘soynoras DOW SE AHI ESOdOVOLL AA) wondyy Wars aioy swy ImQod wo DysiyadovaLy SO) wnwiuid 9 po SE DUG Yen dings $9 Qgyvonb o go voyonpod — ApTRTT TIX] -uny Guo} DYE 204 shone Do UY, anyyadwor Aerayia4 SQ sumuiuiw 9 Yo sug even we Ryn’ oy Sys WGP nésl FQOy 1Sp5 Monopolistie compethon advertises in orden ty AifferenNale and sell their product. Ardversing increases ATC BUT if 1 reubs in lnigher Seles then ttelese FTC could actully* sexe Wyeq Yo BAND quiod prt mag st mate] > A HME {P29 oy WW pep mr? & q ouseye 4n ___ “yysofo TN SN SMI prowap By B24" Coquonls ayy st oy Cyaraysex aq 422 “O=BW AM ayer FRU IKO sy mmvana) (AOL \7>2 “O=IW Frysole mud pvg Smaney vamyaq dysvoyyiar grodw | ve SI 28Y | WS eres) Sol @@jaey Chapel OLIGOPOLY toe! ~ 9 fers, large: fers —Yhey are imec dependent — agiels te enty = padura\ and legel barriecs The Rams m3. foem a Carle) and tay produce and ack as a rnonopolist and then Split The. maxymre Their profits peducher th order te dependence ~ The achons of | Firm has Muswol_ioter an abfeer on anctrer fen Saeategy ekavied ~ Free must 4akle, into account the behavior oF competi aF behavio® yr decides on Hs.00% Game treo the modern ceseards theory Hot ig used fo examine cligogolies.(ern) oat oD sons sed) a 4PON) Kowo5 (ory) eho’ JIMEO My yo OHIO aap onl Alawrs 4524 eet SpaP HY PID aay ga jee aprop “wy poe pyre 4MCT yee sywoveyd ynsozbay SBQWNY ML WALT —— ad 39 Jay, HA ams si Kapow 49 ay REPENS + yowe2Jb0 a Lor OM? an havo, soya YO? sw SS vo WO -yoxd Joyo 2 >, woverd stl Jo 20S soy wer “er ww) gg, 4youd 2ov7> aby 2 74 wien MA ek weap "voyanpasd oft coro2 JWI DVO Fh ing youd woven? Nixa DW ayy eye TD SONS «papved “HON = er) 050511 : hve F954Overt \oe3 So fem A (and fees 6) Would each, ask Hhomselues What they would do if 1) the other fem oneated oF 2) Ye othee firm com plied Note? Tr rhs case fem A would Cheat no miter what fee & did- # KE Thay is a Special CBE called the dorminant Stvatery. —ahere, one 1s alwiys better off doing the Same thing and Tot Firm & word also have & donner’ strategy, is also to Cheats Sune’ both plyer (Fires) end ue inthe Same cll, quis if collet the dominant Strategy equahbaun. teles the “The Mash egyilibrium ig when each player best possible achen given The acken of the other playercenodssnd yernos Tu “A p7g TEE — iosnd 00d oy 02] TY aod HG sey vt sinead Gyosoe 54 smgenleoy * Qh we sey PEP WWE poy 8 40 Bae TH AP A - S- vay amit 4571 pan we oiGpays YS Bt] 2” pyodion ve mat pry st suk PP wnBo ono pve BNO yyoud 2879 een 22 BPA Pao aur ee POS sais 2 wy Gene ony OUP BEM wang yr WR ESS ~yyord jrwoveys vo wea weg SN SP sun 7S asm A < joxe OMe VT pire 20 bydeer -Aybese9,, uy “ane7 * ayes aassarxe YO 490 st \\?? sm 54h so 220g Ranes /U 490 Mr yd yNsoy © Yeo Spas prem Boag 50 ON 14 ME 97 AYP“ FIYD, MeN Sui ge PIM 2A oe a asOysa ee ees We Know cartels do ner aluays Comply ba they don't always cheat. = Frey are somerdhot unstable Renew exompe v9 yout, p41 Pies and Boeing, Po O"/ agopoes are gecelly not efficient Trey may also ogercke o Jag her cour levels due +2 adverhsyny od pesearth edger being mare Tren vet ys socially heresBrodouow [ARPT 0 may pe Seavey way Mt 4I"S2 prem vy (2ay Se 20) “2d sajaer my po meavnap pron Duy a Ahn 408 ay | APN sr of opeapvl Ve pomp piven animes 496 Ooh By = Moy wen POP OI HE 4? 7), mpd OU C seeds Se vw Ler ay .% a = pewaY! sacan> ~OWOQ PVE Duy Mt BAP mmo DUM BR 50 Noy s54509 Dfpewen PIS PvE S4SOD pox oy an soey wy soevedeey Mayen sop \esOHL pyoos 42 52608099 of >MP— sasvavouy 440 Se ( seed) BuN2 sonyyoo DY soap prey vor 409 FOOT NP ee Duow y r wey a 2v0— adoT PIMP N pomap evel Mp $7Owh wo WI ee 085 Tq] Ly vay.n Gar} WO) 4 aden)@yy Comparing gprs to a “norm” Compedve, market, i4p-2 Aas alter produces at minimam ATC, So We Kare sts $0 1 wAN 0 i$ a frm go bys? would Face higher be Successhal dawing other firms ont oF uses Kiron inl Ferman ie Comm PE: per) Twat ad te a narharel emerapoly —So more Snir \ Frye manKerS (Yar have O55, eo _— Natural Monogel! Disadvarrage adeadwesre loss wes less is produced = produce # Vawer cow # use fuer cesources Government may SHED in Gad grank ane Comnperg ye provide she product + = bur governmne Ceguletes Cegprdins grceand outpah — to Imit deed wersht lasssayy Mpg 4 Maan (& Gey Pw (1 qn dn sg Bog “SObGL pry ME L Spout Royo) C Recon to aay pern -sowusane on aq wm eT OO _ Copmperd 50 ssep 862HQ TE art aeTII uy eS FAL) bws er ut 4006 91 Of (eosevonvat! an ~ os Si wey mules riphoeet OUT 3421 © gore eb ae paren vo DUNS 5 + qoute . : . Bee my HO'D oug syuoysvoD “ 3a Dry 3! : SeseoIP MPrAES ay eye? iW “A Day ON ow Cyodovour \anyey @ vy Th SS = romana ¢ pre Day PH OTE DAV! BIEN) DAW Sureo.neg wpnen yaa8 vo sumo? m9l3q eae] hel@ jdely 1) Marginal Cost Prins Rules et Zecondrroas firm bed to Filo Zcondrhves Wn Tes a)ser 2 =VMC &) produ the 20. Het gegic ware bY SD look at the intersechon oF Dad MC(=S) te ae ra quarhty ard PUG * Hho eigg Pye 2? Prac om previos georh =| abetted as gh Ar on te gph Disadvantages Advantages =e FRc guannes = Berm has an ecensmic lon 8 -po WL psATe lag problen as only VR dar yin dans woark it $0 clase Dav may have to subsidy ws Ved to. #2. » Average Cost Parerg Rube rVverage S OPN 2 alsa dee. 9 EP in textbook a) ser = ATC Lp) produce QD. wreck People wad 4+ buys leche, oF Dod ATC Cw imtersech canes + ek quonkhy, Vane, => Jools oF and pre, Pag, — lobelled as ph B on the oraph Arduocrase _—_ Disadvortare = normed rok os p= ATC Tdeaduregne 12% snl txishs & ber effiner at Gane WV Aan ane omduun o Dawwary G5) Citep) owe ny Oe wed pee mer arp nyg¥t a OA Suh . Ay and poe Oy MP A 2 \ wae uy cd 48 po ayod pre’ © Woe S$ pone > nue bay 50 (rd enay 20% pve) 7 “4500 dionyy ddapy af, IVE OY soy A. Mk po spawn Sd vay 40? 442 APRON HH PS FN way mH a) qaruy ay PHN my um aos ou vggud owe peo 41, 50 SObbI” ps \weee yoy) Baroisd § som Bod 48° Povo} Boy som crak GNM saryodovewt ow ase puirous 2200 povaye a 5A eouey'?? Cc aban ayy oer Gayo’ pve sees. 20°42 aD 4 ay peo HD Pe mud vaars24 dusvogo (ad PE om > WO oS aox Oday Joos avon) & Rececily firms have: been cegalated hy mae Tncertive Resalabon: One type 15 che Ree Co Beano i) Sexs he. moariqnum price thst the firm Can chorges ft economic pCO 2) Fen can Keep pack of any Aher 1S earned hente ncerrve 3) Paver a penod oftme, De price Cop is Tene gprated . jo Keep (oF low Natural Monopoly: Price Cap Regus Pcapyres 3S Pv? apyaves WX sen Gang, 4h ene soy kod say county 2008 aL pe srgyow srw Ol? * og aceepey = ESO vpangvoo Sth sya 280%? = ete wg VEOND cin TE (oust) FINS ame arene yo Hoye anupadwon yrds oF PRTN= Smet ash Coq] 4etl . Cop pyro 2405Ojdeoly Cher l® Demand and Supely in Factor Markets | Lig Fach Fpl — Fiams demand labor. ~ Households su eply \abboa. Demond for Labor ~ as wages tthe Q.d. feo woye IN, where. L? = demand for labor a Leber Bes its denad is product products, if pace he wee) by QA Y ond THs movemen* along The demo Curve. Kk The. demand. for labor a5 —\r is deewed demand, decived from the demand for The product Yhar the fire produces. —imetever hoppens to the firm's ourput affects Bae demand for lobo. Suppre the emand for fivm's oxrput 1, the effects arc: — Pree of Product T= quanbly produced 4 — Ye demand for labor, L®, 4oly) Qywov pro anyonpesd DOW Saysoon Bye Ww Moyovyoar vi sahveug on gyOrd sepas 207 Yel ey aw ye __ ve oe FAP Fo HPI MBI (© aha i PP C1 sagtys 20ND ‘ya ‘Ud gi PP? ey Joqvy a0 251 st $I St Ue ot PI porn she PMO vayp lsd Pe SO ay vom pyro sw) spaygonpoud ayo GO SAVIO) C= J ‘sw sr aN vo oly Gage BH rms OMS SOA AON 40477] 4° AY 4 qrdno sy BM Ov = iW Ty { soqny 47 PrP (reoo\| — . eral Repro@ysek erg \3p3 When Firms decide on the quamhty of a iat to hire to produce a product, Th Compares the Cost of hieng aa Additional ust of the Bector wth its value to tre frm: % The Value te the Fro of hirieg one more unit & a Facts oF groducton is balied fre Fector's Ualue of eraigina’ product = pre of X Magim! Jalue oF agi ew anit OU RUT Product of (ot \abor) she factor oF Production exams Ce! is The Yas Te AF cel Sos sit ell us hee rote Naka Macgina| Revove Products. add rhenal ceveaue ME se Gem eas by hiring on& prove were, ec TE he frm Wires me more wolKer Whe produces BS more unis of output and if Pe POS of the product is fy Phen The marginal Ceverue product ( value of pracginst pode 8 Is Ge Y= QOrbr tar worker. 1£%X Teme hire labor up te The point at whieh ne Yalue of Tre marginal paduch (nc The marginal (evens Pract equels The wage Cate= oot oe SBT SF ere 8 i yor RP ge oeE Oh OR, By “5 PVE col ot S Hd hy eNO ay gUUL sarap. oF Sabo = QYL) 42m FG [EFS er of pray ay nin RpVER Seow OH (B aes Ho CULL 7 Taf awe APM 24 DEM SHE PMG G) O8\ FA n\= bee = wee Sod YY oheals amy fo fonpod mer) wena ary apr @ (h=t-l) “sro SAT 9 voyom ig MEE amped porGrow MAE arr) @ “ENO AS. sera 24 St POT ppnpud rsp. 572209 AML pred Born pon oe gh MM 9° mug “ape -88 Capo Op cmnyaa, 4moyoed a Lagoa) oe jer@ysa'y led TF Marginal Rev. Product: 2 wage rate = Fire wil will increnic - pros 4b ack Pras wor Ker A Bem’ demand Curve a Vabae = = = target Cou. Firens use Valor ad capil 40 produc products Ais he price of one of them increases Colatwe 4s the othe firms wil Use les of thak ingur ond mare of The others Gor example, if The wage cote T, Arms may decide + Use more machine (2% auctomate ) ond Ceduce the mumber & workers.cou Se Af TY Je4o| PRWAS—OO | IB ST heirs Vi mdead wor pos TL e Aye wang aed — RODIN) D GU 0 BI = cody aed @ ——— TA ae Gig a IS IT Org oy waiwyy may RSH FIYTIY (P78 +2 A) _ mo 40 STN _geagsv0 S98 70 sw messes a2) HIE cat 200 HIM — 2 pO pf Nh RG) «puny, InsID|_ pee wert 40 $02 P or me na iy een oo Fara Ho HIM 0 ag 5s ysl y s2Gor Sy} + Rydons 49. cray PA SMU oqay 42 GINS Me RIP ON PO mp 4) may se EMD aeqoy 42 NS = CT ye thot Bovpng PASO a wee Dy 0, eg, Te s Tae ee sIne By | stim sey A meget FS ALi Lookur Marie Equlilorwin ee v F eaanrey oF Leb (3 oF workers) As was done previsnily wih supply ond demand in The Product marker the interaction of Seely and demand yy the Valor marker deltemne tre wage Cele and emplaymert level.Aygo yemy v Sey a so ng A ddns RROD so ay pivot" P| FR Gag Semnere mid my mers any S spnung hyde eH BNCAY HIE ME St = spaniddns 9 ok Boray TY se heyenre von 9 THEM st porta) prow TE DEge Foe OE cnyepud 4o some M0 Sq panaray QO’ Me i ay PROMOTE LV yn peep est. eae eNHSAS TT nae pooap ey 520 ways (2 sateen OE sano = PPP yaar e USNS rou jaat-0nt pe ed 28) "PO Sayy? © Sm He) RH TAT HBIFS OM Cmpemees ma 4}) 921 2oe®@Sys" Treguality and Poveedy 141 Lorent Curve a curve tat graphs the Camu abve Locest CAMs J percentage OF income (or wealth) Looks a The again toe cumdarve percentaze of dustrbunon of rangebs\dS J wealth income hy do geagler wages dite! \)oreftcenes of yubs ond locaton com pared te other 2) dvtterrea vy humin skal 3) daseninnader Sugg ad deowond gpaphs cam he used ts Shas Mets SE fags sven) workes wy lao stan worlrs mn Cdure Fo corr oF Lem callese Teey ener Aly WEE | so sepply Natur a laser woae ‘ a atat! 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