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
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
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 the Criticisms of the Economic Approach? The major criticisms of the economics approach to decision making include: people don’t really act in this way (they are not logical, reasonable actors in most situations); and people (includes firms and other...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How Does Raising Prices Affect Revenue? Revenue regards the total value received from selling a good or service. Total revenue is price times the quantity of goods sold. If demand for the good or service is elastic at a given price level the percentage drop in price...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does the Long-Run Average Cost Curve Affect Industry Competitors? The shape of the long-run average cost curve affects the size and number of firms that will compete in an industry. Where the LRAC curve has a flat-bottomed area of constant returns to scale....
