by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Total Product? Note that we have introduced some new language. We also call Output (Q) Total Product (TP), which means the amount of output produced with a given amount of labor and a fixed amount of capital.
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Explicit Costs? We can distinguish between two types of cost: explicit and implicit. Explicit costs are out-of-pocket costs, that is, actual payments. Wages that a firm pays its employees or rent that a firm pays for its office are explicit costs. Implicit...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Budget Constraints Create Demand Curves? The budget constraint is a trade off based upon a finite budget or available resources. When the price of a good changes, the budget constraint changes. Individuals seeking maximum utility from their purchases will...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Changes in Price Affect Consumer Choices? A rise in price will affect the allocation of a limited budget. Generally, the utility maximizing choice will be the point at which the marginal utility received from the purchase of the next unit of each good is equal....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Changes in Income Affect Consumer Choices? How does a rise in income affect a consumer’s utility-maximizing choice? When deciding the combination of two (or more) goods to purchase, the utility maximizing choice will be the point at which the marginal utility...
