Th Chapter - of : ae Gntroduetion to Eeonomes & owt > Definadtion: ¥ Economics oa socal pent aorecren with don the. | ‘production, dining bution nd eonsurep of goot and fenmice’ , S Seclone of Eoonoweh , Nomacloig’, Feordmics ane iA valved fn OX in Aectand, de can oe vtaiee type. economee ; 1. Two peclons me the broods Eseries nb > econ gy Goods)2% Four, seabsch...cconomeces * Financial Institdions Fr: ps _foteoelld. ? Busine hes of edeioimies Eeonomies has two branches. Sueh ab 4. Miero- economics, 2. Maeto~ econamics. He Miero— |eeonownic’,: Microeconomics ts the hed of how. shbdehbds and Lams make decisions and thew “tay fatergaet tre Apeafe mankets, dt Pewsey on how individuala consusmer’s and fiems made deathions, ese ta tviduats Gon be 4 single’ ‘partion, a howehold, a buainesr ong anizostion on a goverment agent,a continent — or. NN fe Miereo —eeanomier L. Miero- economics i> the shuly of parcHewtan marckd and . Bogen of othe. egonora ; bb 2. Gt. = frvolves AupPy and, demand fritn dividual, manketA, i ede ebeel on price. ofa god on Aenvice 4 g¢ -wonks on the prin exple that mankatd Aon cneate eg uilibrin | FSIIHHNIVIVS a dAtstined geographical region, even nd smacrta— econo meer , 1 ptudier. ona << Une, c K Macreo- economich + Meera eeonores Overall economy =O” both, a notion aor te forlerenatenal level. din foeur eam ireluee 2 court, whole wonld. the. D> Diarcence between | ileree ~eewmnter econo rues x Macreo-ecenonie> 4. Maeno economice ia re hel oF whole coon 2- Gt Involves onomeleng | and fescak poticx. B. IL effect on inflation. 4. 8 wonks on the ekoner may be im % slat of disequsl’brium fore oe longere. period.es Biyponcseh slesormmmics,, DifRrence between Positive econo ~ Nor. —moabrie eeonsrnias Positive. eeonomeed. r 4.9 Positive, eeonomich reelates +o the cause’ and offeets of economy. 2. Hk. deals with frets and data. am 3 at analyeses Cause and fect pelation- Ahip 4 Gb is the atedy of : what aeteally AK Ze 5. th plateriant athe be tested. Usa Nore- mative’ “eeonomies >» 4. Nore: native,’ ecdnomies relates to the epepnesres # vokus. Sudgemert. . Ge dealy wlth the " deliane pont of the. thought process. 3. Ht Parser Vatie gud gemen £> Sehoolx * (oF “econernees. Theony ae. ao § Aehool& af @eonoméa tought. a Te x ang, monelarcert’ 4 tec. hen, A qnost, A Comm 07, © andalesynesian, Peeng. a Monetaisest esp 3 Mone tantst have genen favorable ogee on dnee rmankehs on the. boat “Nay AY alldcate resources and anegue thet tables ioney tery paticg is) the best Course = for, managing ‘the econarne| TE relates’ to the. enor police. *- key nesion iwthesayt- keynesian approach b eHeves that amanket often derat wonk Se et pdigeehs oe Hen oum and. Suv ond Siscak pee ey a “wetintiegs: vgaverenment te ondere 49 manage irrahronal om archet tre Cessiomr, * What is scanetty P mens the socke a 4 has Lémided! nes ouneas Carece and deneforce carmot— produce. berries peef= ph, Be | git gore anclEEE DOW ta ty to be ty la Uy Up NE Cs : fy Chopterc—02 FH +t 4 The Bosiers of sere!4 anal demand S Desination af Demand ‘ dd. Demand % Demand nefens te quantity of demon | mn oe means the quantity ay gras and Aenvicer wl purchase ‘ iipt tor a perron can patter perbaljaal amount oF monet ‘the demand Sfnehon. (d= f (ps3 Poo + Fea) “Whine 5. Pacde Y= Income aA Price of Subsite qn d4 © sd Peas | Price of Corplermen i gods, > Demand which implies f * Gp eeonomiess Larrand )sppferls fo effeetive demand ihieh?’ trmplierrdhnee i thing’. raceSash aris ; : 4. ae Pee a eormme dity , es Soph cient Brand, e purcehase the! eommo - dorian Biv ttathers the abi sity te Pod. ialatiglting master, to Apend rmonee to Acquire the} e@oamme ass =: Demand Aehedule’ * Demand / sehe dutg Je a clabre that Ahows didferent \ prices of a geod and the apace of Mnot geod demanded ot each of this prices. Fore example. 2. STHpey ts aft eo cheidube. Demand . gphiedivle s»ieorrs be. hwo apexfF ee ee ee ee POE OP Eb OG Eh ae Such as: 4. Andividuoh demand pehedule « 2. Marckeh, ‘demand | paredule : — pohedule, : am dividuok dro. fable demand schedule. ae = ecenmedity Which shew quanlities OF ene Rima EVEN b WA which an ‘individual sane * int ° me. at alk pessitle prices ot oo ger * 4ndividual demand deFrne Such as: * Morcked. demand..} F schedule [4 devine 9? 7 SLB. ; VIVO, Dosages amare tui given _Borrme dity wohich all eons’ . 24 oA alt possible of prides nee rmomert- of atime. wish bivib ab: 3hie a P - A ar: L. ites OF oo ad % ad @ Morket demand “se Se se are Peres olds etal : “96 (20 githonereis | oP i. ; Burd | 12? 20 lo Se : SUN _ptshive4 ; fonvit |. 5 BO le | Sg 357 D> Demond Cunve | ‘ Ge) be * The curve Which ahouk “he "elation between pnicer of a egmmode | and dre ormeount of a eommo di that the ener wishes + brane — | P ona! ma g “veabied oderhamd > Pe urtvenr eo BPs ant saab reeacnd: Demand. isunve.. dgalu b sv'Domand, curve, Garr we foo “hye Sush ari- : 4 Gndesduad demond éunve: 'g, Market demand eure. amrrkop L pppere rere eres rer rit ses thi tasEEE EEE PED WD ED DD % Individual demand eunve: When individuas demand . Behedule ts presented. fn. ao Cunt», this, i called fr dividual.demand,, eeveve: ee Sueh ar: * Morket demand curve : Such ast- le auantily - When. ange demand phedule..i£ presente ct | a Cuave, This ts called pnankets Cenetsad eertve ,EDIE vy. a Bememd ‘pel Detereminatsy ore | \Deleremminants of Demand? ‘we... bs oe Fore an indiidugt.? demand = A. Price at the co como diy. 2 dn come dap the eonsurnerc., 3. Patee phy reeloded ore pubatitcte geld, Ae ComaucmarcDg © test Jarte. 4 wealth ou Comsiscmers expectation. # Fore market demand :- pelganc rash ' popidiafion, bani Sian an oo & ¥ \ 2. Brakuibudier “QP Ameome ic Siac sot concecsl SeNnvone Yyadbs> DeSinali 7 on oan S Suprld apaulenlt ae “é * Supply ae ee EconomeZe the. duct or ponviee that amount of & given pno i b offen to conus Suppliens ane wiktin "i a ghen price devel at a giver: peer > Fachng of SUPP ee r gl praducl * The. factonS of supe fal a given on Aenviee 4. Ba oe ee 1A plated Price of dhe ‘pres duct ore Bui ee + Prvce of related qe da ore pan icer, factors ; prices al the. presduction Paice at mnpub. the “Heh ber ik praeton Preaduetirn technology: a Soy ; reece TE poachers orelaen Gaver pakicter os oo ce Rondom, riled orc othere. Facbea unts ,pohedube schedule i dohe that shows at each pniee. > Suoely a The pope tie, quontig, dvpntied Gueh ar , DP Types of suppl sehedule. # The supply aupely pohedule can be dso types. Such Pc a. Andividuak Aupply schedule 2. More Aue poheduhe oe dpdpihel “s ply uppET OE ee a pohedle : When & table thaws : the Auppiets of ale sellers ia avery pehedale . # Mareket \ suppl the. “husn of called omnanket Such as: > Supply evnve. =e a Supp! conve ia a graph i nd a 4 \ ‘ : o ile: he paice ap a Gee? supped ) 7 + Ty Lo supply ewnve Co oe » Pean be two ee. such oa: x Sepp curve: sa loo | - 4. Sndivi duak Aue Curgve - | 2, Moret iupely jemmebio |. | ao cit J it |. | | |; = os t OM fi Voukvet When a graph. Dhow She inde duak supply 4 ehbtech., ea divsdued auerl eurcve, Such a. fe de 3 a 12 38 4 wu Aucontity af Mbikeb ysupply \. eueve | When a graph phous he SY amankets, supra ip ealled market aupel4 eurtve . Such art eo PPP PRIA LS DEAS TE ttt Stal SSee bh @ bbe % Price elash ay 4h Chapter. —0 a ao Efeadietia of demand H Demand > Defination of elastiaty of 1A defined 9 the * Eloaticlt x a | demand degree of peer pon sIVErWs% ad the. quantity ee. demanded due te the charge of the Pm oF the. coromo dl ore the in eome of egnvaueenert ore the price. of preloted ore pubatitebe and > Types! oF elonticlty of demand . am 1. Pitee celoaticily oF demand. 2 Imeome elasticity oF ef demand. 3. Creosa clonticty oh demand: a deynomd : Price bloat erty of demand LB defivsid aay the. reastio of telative oft preaporc ton ote) ehomge a priee oF that commode pubject do 4 ithe seondih'on thot in come ot Heep sore Youhtttude. Fred. i the -earvsuemers ee af gett pa& q 7P : : 2Dkn gq. Pre mpl bo Lo otha = ott Gan ™ VAP. i bs te B9bng ort, ka A s2 _ obo fra wo Hbiras bond P | aA ne Ae oping Qt oF, a nee Pa Quanhily demanded S 4 st a ob ORR HRRRRREAERK RAR% Gneome elogtety oF demond: dneome gloat Benet ig} deitnel on the alin” of relative orc proporctionake chomge in quantity demanded of a Commodi so The change. In ineome Augect fo the eondition that price of that eormmnod: or price, of Héteted ore pubsttudea geod with remain, Fixed Fore mular— » ; \ eye eoporctionate, change in auantity demanded nie Froportonate. change in jmeome fae a ‘oxarmple wr . 5 a He of 4 dee ‘ 4g, 427 h) . i , Mieke ee ays Yo “pose = YL ott Ya ot : P= oy,GY Yo. 94) RD: So fq sg ptt bothenaiign ast postive nelahonshep between. auantly and preee, : i GRass plasticity of demand : Gnas? olaahieltyy oP there lalimed 00 "te malion, cb the. presperctididie.. change 1m “o.ucendi demonded Sf a eommeds and the preoport— Henate Changes sins dhe prite, of _ omodtnerc potdted sBowmnihds Aubg eet to the condition that spatee= of that eorrmne diy end the Incomb~ of the communes wilh remain * Sed aS tog» rb WObLL ELLY th = > PVeUy\ PUVUUULEDOI Oe quantity Ft Pry ha SS Preo pontonate. ehange in cee ae en. OTe a panttnaten charge: tn, price. nop le: 4° For exomp i Sights; ee tahene, Ade Ve~ Pe. SHAS wHoskseq — bas alps Re, ae Fe, Peg eae ‘ ; ets Lo pokes. See ee quartile oF Taq and. price Thene 14aoe of price alasticily of demand ay oe Eloi. © then eps 4 & te Cy soi te When epat tt Gnelortic when epet oe Price _ floatele af demand can be Jive une Such ov: 2s iP. 4. ParcPeely elaatie. demand. 2 pe Rete) elaskic demand. 9 “Uste elortie demand. 4, pBetatively, imelmtic demand, , z erates. \meloati e demand Dee DRRRRRRRRRRRARRAK ~ Per feelt elo He demand : When the propechimabe. Change in quontity —d demanded | of a earemnodely duo + eg extend buk thece ie 10 ‘ Changing price oft the pode \p ined then. tle cabled a elastic demand, adanetis Isr, oVibido g aFore example i. Rab vely elastic demand: GF the — preoporctionate ° . ‘ ah Ch ange m quantity 1A grestere than 2 preiee of coramedily pres pore Honate change fn. tp called relatively elonte demand Fore example: Ww, a ee MOO HRHRRRARRARRRR4 Unit elantie demond : Ww pearly demanded change. gf the pre port enate. change, ip equal te the jpreo por hbwabe in price then it i eted unit elantic demand 14 eatled unit elastic demand « For. example, 7 e, pa 6 Py ° ae 7 Fare, ezomple, 04, Ry, Po = 04% P, eh 048 Pe TA Ta gg? aa > BE ment : ae . Re a > ap = 4 Explaim 3 ep =inelosie Diimand t df the preopuitionate in, “quantity we bbs than that bn dit then, 1k 14 Called Conn Fore example A boone fet U1 Pa ° ea Where, 04, %e Pa < og, Ri Pi 4b Sr ey ae g = Opel explain; epe4 - epee ees (iS iA SSS SEER RNRBOR,OR ca nine: pie oe SOM Bw RE Aboto ately in Blouse’ demand’ When. thene. i me charging quantity demanded but lige. 14, e a prupore tionake- chan} in. price. of the Comms uty then. it 14 cabled! % pet Ineloric demand. ‘ Por example PyWe know brat; Price dlontisty of demand, Where, Ag = te- 4! & fhive eloatieity of eae Proporctiencte. change in quantity im entee Aq \ = ap r. ay PO = ay x ap 44 P = ap” oe -_ a Py ae ag ok = Oe tA 2 eie oo AZ. Preoporcti on ate Chang e aaa - Ane ce PPP PPAR RAH LOL ARK GR SR RK AR KS lc» bh Lb 4} ¥ | | 0 bbbh WUbbS » STVSVIIIVIVIODDED ODD Dh | Sotuction —02: Given, @d leo \20 We bnew that,” y Frapachinnae gore ey=z Ip laaictty oF Amer y= nate In ecme elan oy chaeng, in merme Aaa 9 1 $0 oko So, The income elaaticity Ff a fy aa! mand th +52 g kosks Aanwade i ity of alemand, — The erohs ee. of es aeat b 0-40 AP Proporctisnal e. change e nthe. aataca ttt of “2 eoporetivante, chienge tn the price of + 44e § | ae we ARAKRRRRERRER KLE ERASE SESbbbbbbb b SITY FISIVIVYYVODO DOOD EDSEDIILE SD!bebe weeat—~dew dir tie. bnow that, eruption cheng Cro, dem = fon queen ote Re elontyes: af de J € 2 quan DTS oF Co Bees be ity and, er > 7 fan pnice of + Klere, a Aqg= lo6— le” Ade \ TT = - 7 4p, 6-5 om =" - “te PE \7--e#s and, 4e= 105, ha ape aE ! 5 = 1 x log = 1048 [a Te BB bs 4 \ Go, The Cross elacheity of demand , o | 5 | a aes ‘ - ' meee RHR RAR RRRKRKRRRARLAALE |Wwe know that; frice. eloatiity of demand i Ep = Change quam Preopore homate ehomnges price Whene, 2 ny . 4p S- ‘ ng, / aol _ a Age Fo-S° 4p © : . -? _ 4, ft and p= 6, aes? — “Aap a 2 6 —_ # x “sy A = —2,40 * Be, The. price claabicity of demand ik- 2.40 oeLZ let, A aa ny” & fee HYD vite 1 ar . > = A %:.7 sph 7 sont ataLhats fenged Thar, 8&4TB} Chophere 03 Fy + Consumer Behoviote a © Desinitton: Consumere behav tote is tha. study of indvi- duate , Groups ort organizations and alt. te activities associated with tha purchase, use andl disposat of quads and services and how con surrete S emotions, altitudes and pre ferences affect PHA we CeO, rehire product that satisty eenistemnere EN ae Types \ of goods . 4. Nonmak gods: A nonmak geod! is ang gard! fore which demand inenases when yncome imenzaseé. a eo tree yp! Sd Q. Tn-Fersore, goods: An. heeft gooo! #8 a geo! . AWhose Bom adiol’ decneases, when eames ecrnelt. y : Ineome’ rises, 7dl 8 eli 8. Susttdues goods: A) isubstitenes good ts a good where a Condumet’ Can consume one fa place of the \ofhert,. SAS ARS Y 5 4 Consumption Sal é,, » : nt aod fs 4. Complements gnds ; A complement GF \ a kind of goods that ane Conse! “gether , Pal SP it Pa fT rf tis tse st Consumption ay + Dewand _sehedute End deme: eunve: ; O The demand” ‘xébeabile: t¢° a. fable that shows the qian ta, errondedl “ed each price. “7 > The demand \ exinve ey Aeok qeaprs “the dema \ 4 | | ; ez| 4e Shifts tn demand curve! An ehanges shad toutses the | Qquantt that buyeres wish fo purchase ot any given pnice bhétts the demand! curve fe the. rig t On he othert hano! are chan is that loweras the quantity that bugeras wish to puxcchase’ at an, % hide the demavrd curve 40° toa LR: lven. price @ R \ we Vanicbles that indlutrce bugeres\ CG Price of the good thse GW Income Gil) Prices of rotated qe" CY) Tastes “ @&) Expectations ag OD) Num berc tee buggers. M ae depmarnd cxanve 3.04 \ Tene Say earyieauhen achsng™ SAD iS A ds ; .| peste aight: On He Sherk ee fhe. quently Gren: es y salon? a Supp! unchanged! onpeear ge 8 upp 4 on tts eis anal, supply curwe: * Seheale is qa table that shows Bapp trad! ad: cach prece , curve whieh gree? choms The g An chang bya naises ish product ounve hand, ang change that- phot sellers wish te produce. PEPE ghifls He supply Cunre V a Mover am ment Vabrigy ee k \ euprly eunve: A movement Pon im Lops C4072 papreserts fra vou. co | of the. comrno Ut wlth a seat ofhert oie fons nemaing EERE QUT Y & Doce oepeeeeeereyeceeytssat ye% Voriablus that tndiuenee setters 2.) ® > Price of dhe. geod itpeld GY) ape pritees « é T'S (i) Technolgy. ; 2 ) Ex peatations, ©) Numbere of sebleris, alo > a> (iH # Equigibrium of supely and detiand? The ND Cb = relam, of supply and demand ‘ss a pot wherte the. Supe and ‘demand ciurves inteseet Fypitsbriver. preee > Quantity suprly = oh a Steps . to. omatyalng changes in senpti Hele, 4 ® Deetde whether? the wevert, sheds the! ice demand cunve spt SH rent Gi) Pedder tay Shieh, digectton : hes HHS, skids. % — sotasttn AAstH Consumer. kehovtore: js beat understood in threesteps + W Gonsumere predenence {TE deeribes the neasonss People. wright prefer, one god do, another. (Ht) Budget consinainig, It decrutbe, the consumers price consideration. . : CD) Consumer. choices § H- deentbe He. COMEUTAES “hiniss yeh BaE fe. buy com binadions of goods thot- =, trey sate Yor : ‘ toy Cerrsuctnere, predemence #— colin Marches agsket F erage, backed tg a list Dith specie quantifres of one ort Mone Za ds. eet Ht SAN caan Pee pra hans ch 2p adn ; o basic Gidsliin pttorks: (ab ouk ‘pie feran cas ¢ fF | Lf t oD Pra fenenesis faneb@omplite ry! i) fre feneneos 272 transitive: Y Copseanents valways prifec moneef an sal ind °C t i: ot soy IMSL 535 & sGpsipeib “besoreb | s rs, atlas - Divrénistng ananginak Hate oF subs Hifi on bre Indifference cunyes ee abaver: + Tnddfiinence eunvest Bn. indifrenence, eure rapnesertS all, combinations of market baskets qnet provide a consumed with the same lever OF satisiiea ton. LAPD RPP PER PP ONG PHFin a FE r doy He Indidfercenee mopss: An indetfenences Map. je a. set of indifference eurves the deeribes a persons preferenees fore ott ‘dombi ratgn ad: two Comrna déties. F # Marginak rate of vats 2 / the of quate fs the maximum / mn hot a conawmerc. is wihling / gre Spe, eae tb obtain RS unet af: ea lo, aie,Diminishin a Disnistag » armanginal rate of substitutions The low of dimimishing marginal. rates of “bubstilidion states thet MRS decreases aS OMe amovas down a ékendared convex lishapec! “eureve which, is the 7 tn difRnerce Cunve: * + . ce ac | » MRS.5 FE a = sMRsi=' 6 orare MRS= 4 > ie. mo : : ae 9 . % Peredeet bul hele. Thos’ apis for | ashtch he: marcginal reale. of gubstittion of one fore tha” ts a constant is called perfect subs, < e = = < < 4 ‘ % Porgeal “Cimplimients 1! twiogoods:\for cohtok. dhe MRS fs ereo ore inde coatteh porte : Complements. 4 \ % >Ara pS YYYPYV DVD VY wv TO He BADS 2 BADS refers to some things fore whieh Ye luss 15 pre fenrod do mone. Exomphs: Aire polludtor, Asbestos, ae Obiity 2 UtiLe is mumeniegh seone ree pres mere gets from a entan F the. satisfaction that a consu gra market basket. : & Obsety odunetion $ Vii fen etton is a Bicone tha assigns a bevel oF ost ‘y foeachs amartkit- basket . ie, nse UE = Exomple |be oa > Ae Types of ubibily imeton: W) Oredinal uiitity Function, Qndtnat bisa dhmetin - reefercs to uditity ~fimetion thot generates a a reanking of marthet me boskets tn onder of #1 most least preo.ferned. shot u metion? Cardin fi Let Somer, OG 7 a erelen; tho at baskets preefense! ia inianass Se 7 vy my fo axothere. ~ ‘ Retr ows ae ao apes ing dong eatihe oe budged “Dchine “rofirs to, aenshrainits “had comstmse " ae nesebe ed Himilea! income. “iT, Ly SD tend ikcodes ell com 1 ‘fare chick -fotah M07, 4 - en ee dees face. as PIE ‘bts Aol ete Mines: binatons of fuor a a apent equals hoteh income. Wa ® Mone Con. ca. wnitten: ORY a a A a. i -B, co ri ® of na * (oaks reat ae of bugere. a and seller at a procluct or. senufans) Posides, te yt aw tuhene.%@ tHe» suggercs and! the sellens mee oP place. | 5 ~hTH Chapterc—04 Uh Cot Analysis AX # Production asst on Cost of production : Prcodutchi an ore prco dizet: costs reefers to the costs vt Cunned by a business ~from manufoctaring oe prooduct ore providing ao Service . ® Production cost te an tmpor tant ~fectere in: ath business” deeistons especialy those decisions Con— Cernin: z W The. Location op the weale points tn producto “Manage ement: GD” Cost Saabansastiba: Gi) Finding ‘the optimal’ Level-oF ailpud ¥ @Y) Determination of price ard eaters” rin ©) Eslimatton’ af Hho costs of ‘business operation + the production coke are Bites business ou Concepts \ q) Concaphs. may fore — purposes \ ii) Armaly tical east concep ks used in “economee, amalysis of business getivities.Soma accounting cost concepts @ Orpordumity. cost; Opportunity cod ts the loss ore the benefft that ‘duld’ "have been enjeged fh dhe aller ‘mative ichoice ‘was! Chosen: Some sahalans rekere. B epperlinity cook agniattercnadive costs & Economia, rtent ore ebonowue profit! Feonomie Narent Te fhe. excess of earning dicomm Envestrnent- “no overt: antl abeve the expected! ‘oreoft » It fs related +o opporctenit casti CW) Pabad eashss Aekeat casks nefere +o those, which ane a nceenned by the firm, tn, pas ment Of Labour, materials machina, plart, building, equipmerd).. qeavelsing., » drensparck and othere foetores oF ..pcodueton, boy . (a) *Boisinese Casts: Business Cosi “|.the . expenses, (neumeal te cans Tt jmolucles att the pay menks ant eonfractiak. pies one by the firm. sagathete: birth ipraciaion og plat”? arid eguiprriert fe ehre fy alt out a business. SBN co rsideisasicac ‘ reise sided +s ee 4 “ae Aaa WOT OUR Ee cio MN DY Co) Fast costes Fiuth ensts fnclicle -bustnass cocks, Opportunity costs and. “nortmak profit othe : re presents. a necessary mine— normal profit: é nem, canning fr atldetion te fhe oppor tecnity east whisk a. Pim must neceive 70 remarn in business. \ (Y Expececd casts 2 Fuptteit casts refre te those Costs thot abo xr Involve cach p inet ond are reconded in accouncting, practicas. Such ase Wages arid! safahias,’ materiaks; (sumancr Phemiuy: deprectaction ‘changes pete. \' C)) Tmpticid ore Imputed costs: | Tmptiett’ @osts reefere to those cosh, that cle:mot- appeare ’ tr the. business, aoceunting.. system coco (3 (vt Oub-at packet x08? Expenditure, Hens set Involve Caah payments ore :Caieh\ sfrpne eres ae mre cursing and” non- reeurningg are. oe in economics “as outof poeket casts. dssv Ni LEG Oe Le) SO BOD oma 9728, 2! w(t), Boat, Back nck, aie rm business cosls which dd net involve: i, “¢ et bubaprovision is gmade jn the b00k8,.64 gece” and Hey are teken into account jyhtle QO) Fiked! ‘east: (Fa) % Fixed casts ane. those. costs thad: “ane fired» 'r Noleme fore. a certtain eve ad output... Tt includes ¢ <@* Cost of» managerial ond Fe 6) De ad ministo afive : preciacton of mae himeny . @ ‘Cand: andintenants” and" thestike. @) Vontable arses ¢ Ve)! Vortable costs ane those costs that vory with vanialtons In plot outpubs oe Um cheddes tay sales seek “We Goct oF, raw. materiaks > &) Rucrsning eosks ods fixed capital. Such as _ ust, mepains ele. Othe eaihs' af alt other trputs thot moor ny Hb the level of oudput. b } mshebens pie, “ ¢ / wh) tel coeds CTE). Tort casks sm rofere to Sex ephe fetal, expendatune on the. production of goods io gnal sserevieelsT, Proludas expiueét ancl“ r nae GPE OPEEEEELSEELI TT ETSAP v W@W) Av cost (At) + Prenage cos Is a Stafistical mafune it 's not actual on claol ‘ oblaineal by deviding totk cost by AGE “Tes ohh cost ali i Foe. aon Joudqut- . hgh is. the Marcginak cost (MG 2 Marg inak ; @) ne 4 pial ae on. account of prclucing g addetton unt} of @ product a Th is tre Cost of the maxginal 9 cont ipreodiced 3 ype LATE ossleit chinge depieplet! vieag sO AT Canty mores ET Change ir grb ly WD. Shoat ram costes. Short nun \easts 202: eosds ohio, charge. as, destined. output changes, Site of the Ham remaining eonstert: These casks es one often retenred r fo as : vovtable, casts. . we ee castes bongs ran easts sine. .@as ts - ori Haier ty Pa drasiats Seeh 98 a 4r a) Inene mental casts: Trenermenfal. cost refers fo 4 tha. totat. adlditonat cost assacialed sith the x5 1 elects lon ft expan output ore dy add a Trew “s vole of product. Tr alsa Ole. 05 @ A resulf- oF change In product Dino. » additien af ore PrteodicHon of a new product, rag of bld technique ot production with a? -oneiand the ako ete - Gannot| be atten,ed! Inenoase.d. or, deersased by vonying the. rate. of output ; 4A 7 “i “ (ix) Sunk costs: Suck costs ana those cots that = . @) Historical cost, Historical cost} refers to the : Gost on asset aequined tn. the past, (arheara~ ced ‘i . nepleceamnt ‘ (el) Replacement cast: Replacement cast reckns 1 ‘ whe. “outlay mode. for. (replacing an cll asset Get) Prtvate and’ sedial casks? Private and! sock eosts ana those costs whieh anise as a result of She stenetioning at a fie but neifnart ane normally: tofloled in the business decisions mor are ex pei boane by the finsn.eve “The theony of eost$ The eost output reekations + Cost fnetont : ar eu Tex CO) Ja long nun, cost denefion Jes TFC + Te » In shont nun, cost function dyare = atve % ‘the shoot nun cost fumetion and cootiounvis om 4. lineart cost inetion, SFOs Q\H. et. ba. / 7 Woy 4 97 aol! * 2. Gandnaitte bees Seah arte yo ST ons y Jos @=at ba. + ae Suodkuse sy “GENRE oad unlit Se ea sah Fae Ox. anbOnn C4407 # Break even pombe Bresth” even hineled Sahel the amount of pyrene wcebily * vedo Covert. 2 5. tile veined and variable expenses Preunred? by O Compapy. within a speetsed time. period.BOQuestion 0S! ae Short run eh east dunetion 1S ge TC= loot 50g 124° + 43 bx Te ts bbl east ancl a 'S output: : (i) Determine dhe below queston a) Fotos Sines. cost fonction b) Tofat vantob b. eas? fenetion, pn belew tha leveh ) fvenoge vantable eos} function. gd Marginal: east function. ewewnve ee uayvyGi) Cateulate He below value. ohen the firm produces do waits age outpuk. ee epee a) Tobk cost (Te) | 2) Average tolal coud: carey ¢) Avercoge voniable. ceost- (A ve) d) Mareginak east cme) Gil) Cokeutate the level of oul at which pve hs mnintur . Solutions BO oy a) Total Fined, cost fmetion £28 i TRE =dao pa 6) Total nt gS cos rele Tve= Te- Tre = [00+ 504 — reget h BePH oe Ok = pogulagyag® “Per gps ~w s aM: : 3 _ Tve = oq. 24 +43} peecte » anteBia® * cost hencten: Ve . 50G 12% +9? te n N oF . d) Mareginal. sip ge a a b*4, Bs “(feo Bo, hate is SAL . = & Og poxt~ lene a” ta ana® S04 po 294+ ae es = F024 946, ot Me = mn 24443 OS meee ee eAagtEW Q) Forkad~eost We want fp ind out, when {a * le) +e = loot bog — tear +4 0 = 00+ BOXLO— paxio” +10 = 100+ BOO {ZOONIR SACI oy = Yoo . Total cost (TE) = 400 foe. avhen, ael8. ae yo)= 40 w fon, wheat ws AV Preage ptal eost— &0 < APES = 50X10 — roxio ee lo = p00 — 1200+ loo = 800g m™ t ppg sf VOR 4 = B00 = 30 Sh BO) \ - Arenoge vorioble eas? (Ave) = 30. were when Y= lo. en t d) We want fo Pinal out Me = 50-244 +34 = BO 29X10-4 BRIO” = 50-240 + B00 = lla : Mareginak cos (Me) = N10 for, when gala ois. pndhy ) oes, * 88 =GTa) ogee 2 Ave = G0-'24-4 ae dve bow that the Level af oudput of Ave ett be anintmum when He. fist “orcilere detfersr Gator of fle =0 Fel NOMS gas cog aie to bed! O08 | ay > o a aaa eee POPP PPLOSP LETT LIST $6655 toyont &. / eo x (50— 124 V) = 9 Se a 4 ) : oe 0 1oxt¢axgrt =e on, 2104 24,=0 on, age 2 on (2 ie Zs ge 6 &, ‘bvhen the. level. of out mintmeum. wt is G then AVe isTd Chaptere—oo % Choice. undere aden Uneeretainty 4 Riski- Rush ts the probability hat actuak reasubts with odifferc ~from. expected! nasutts, Tt involves uneerctasnty about the effets of an’ activi. * disenthing nish , we Probability : Probability 15 fhe. fkaLihoo ovd-came. wie Occurs. # Expected! value + Expected! value is the prea baba lity of Fhe. poets aussoetat weighted avenage wutth ale possible outcomss. Expected value, £60 = Pays lage Eo d that a given Pr ry Erramp le: Kitstment of | mvest men in offshone dining explorations Two outcomes ane possi ble Sucdess — The Shrek price inenease from -$30 & #40 shane eat . Fatlune — Te shek price, decrease. from 4% fo 420 shaneVY Pb bb dU YU UDO . Sy ey VV bb SB ObSecHive, preobabihity : % loo explorations, 85 suaressés and 75 Jailunes . Probe ety of Success or Ze and Preobeobitity of fatlurce CPa)= 4 Ev = Fre 2k, + Pte = +x 4yoshane + x20 shane = (fo415) shane. \ = 49m shane 5 \ S0, Expected value Is. a ieee : * Vaniobifity + Variability is the extent KU Atoh 2 The possi ble outcomes of on oneertipin theater affer. Deviaton: Deviation /s te difference between | ‘ expectoa! poyodt end aehak ne eo / net Deviacion ae [ier Eo]... Varéance, of = fax a S89 Sae Fen Po eo)- Slandsee! duviodion: Stondand' dlactation is the tec! avenage. of tHe Syne root equanes of the deviations of TAX P obs come for these associates! with each ‘out -eppected valued. % \ RN PryxE%,- EOYs 2 4 Pe Puy - sey] Example t oye Xo $d Cuterma of. | Oude ECD Name | eee “Seba Probab llity incone Feat tt KPa Commission | we ed 20 oo = looo [500 BB=o2t : Pa. ve] iB, tio al Ble (500 Cokeutation ie vorionce £ nasil ' 1500) (noo 00 Ego (008 fort Ye a ofob-ed ° = 50K 250000 + « 50 w 50000 = [2500+ le5008.\°' Ty. 1A fo 250000 \-Fore Job- 02? 7 Wn = -ODX (iego~ 1508) atx (y590-Ip00) = +99%x [00 + .o1x 289100 = 99+ %80! = 9200 Cateutation. af esfandand ection : For Job—af : og = N 56001 = 500 : . Fore Job-02: ‘ , . og = (9900 = 99,498% So, The. second gob, 03 mone. comefentable because jp has, high. enpectoo! netunn and! Leaps vantanee and 6 ancl deviction, hel X oes a(vyat% Preferences toward risk Ae #* Risk pemferance rogers to tendaneye a on bass risky option. 2hoas to ehIbSe. assumption, * ipo g. ameng echt alterenatves Ci) Consemption oF single commodity | Gi) The consumer knows ath preababi | Cy) Pay offs ‘measured in terms of kitty | (ty) OhLe funetion given. ue Expected ubhity : Expected utilély 3 of fre Udit as asseciated! with alt outcomes weighted by the prrobabi hit out come will occur E()= Prey u %; fee ae Lithes 3 the Sum ssible pos that~ each Exagnple > x Suppose gpenson: is. eannén eunrent vybitaty tis. (3. She rs cons) dining a new rush job. She has. 50 chance of frenease - (oily; ere income. +o 4 30000 and +50 Chane of decneaseting here. income fa 420000 (Uidity-le) 50K 18 + FOXIO ot Fren 415000 and the 3 EW)= = OTe 2Pe ys VV WNL YD OY OV YY DO So, the ubitity Ewe of new gob whieh is gneaten “than. Ha ewnnert udility of, the cunnert Joe-. So, “the Tew) Sob fs more paotfecl to, eunrert Zeb « % Rob Different pneferences dowandl ritsles ” People ean be nisk avense, ask posrten neutrak, risk lovin: a Risk: averse Ai peres h ae . on bw ea given Pcome t0 a isk ae ae acritiin income,, witha Same expecres! value. fp person is eonsidkned , nxsket eaaiaie, if fheg have a alominiehtng: amanginak ch eet of fntome. is Beads yy Risk neutrals A person fs sand to be nésk neutral. }# they show no pra ference bekucen a. -certatn. income and an uncentarn » \ONe, with the some, expected’ value. / ats lag, pin il the 1 I lavtng tf eg She ae iat hy, eaect a an.‘ uneertaiar,/nearre, avert. a contain ineome iN fe sar expected value bit 259) a Beek pramitiha's The isk prerniion fs rte. aan aunt of m Hat a nisk averse: \penson word psy to avold taking a task.Oy Redutadng. rcishe ; ca Diversatdleatisn & Divercsi Reattorn farthe pnaclice of ON daeing® rise by ablocatin.g¢ resources to a vaniety af ackvittes, este oubeomes ane not ee ore tekated,, Nala. oF ‘cate Foderemadtion” reaforids toy the dhe > enpieedad: crake ofs: ascholee. -w Cbivplete 'NadaewAation amd the: Vexpecte when ‘Yndoremadion CG incomplete. ‘assets at that provicless mnBpyemations Value, of eomplete tRrenee between hen tune IS do volue Pad Aighs BAe nefons. ve. eomathng by fle ourner. a Sbw of rma on, Senvices ford | peakens L tha + “Rete assod'p Risk eee ans sein earetote flow of, ae po SRALI CS we ae owner. “ asset is the assei om . seh OSS asset Plow af one siete a err MQ ANOWR with cect #5 feta nf ore Senvites se aay a aca cl fS Rosanh iy {