by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Shutdown Point on The Cost Curve? Shutting down can reduce variable costs to zero, but in the short run, the firm has already paid for fixed costs. As a result, if the firm produces a quantity of zero, it would still make losses because it would still need...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How Does the Production Function Estimate Inputs? We’ve explained that a firm’s total costs depend on the quantities of inputs the firm uses to produce its output and the cost of those inputs to the firm. The firm’s production function tells us how much output the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How are Short-Run Decisions Based Upon Costs made in a Perfectly Competitive Market? The average cost and average variable cost curves divide the marginal cost curve into three segments. At the market price, which the perfectly competitive firm accepts as given, the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Market Structure? Market structure concerns how competitive is the industry. That is, it concerns the following factors: Market power of each firm (suppliers and buyers); Substitute products; Barriers to entry; Competitive rivalry It also concerns the number...
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...
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....
