by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Marginal Revenue Product? a Back to:ECONOMIC ANALYSIS & MONETARY POLICY Related Topics Law of Diminishing Marginal Returns Marginal Analysis Short Run Long-Run Average Cost (LRAC) Long-Run Average Supply (LRAS) Economies of Scope Economies of Scale...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Long-Run Average Supply (LRAS)?The Long-Run average supply curve shows the relationship between price level and real GDP if all prices (including nominal wages) were fully flexible. Note: In the long-run supply curve, the price can change along the curve, but...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Long Run Average Cost? The long-run average cost, is the cost that it costs (on average) to produce a single unit of output (at any given level of production). Basically, it is the cost of producing a common-sized, batch of goods over time. This cost is...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Production Function? We can summarize the ideas so far in terms of a production function, a mathematical expression or equation that explains the engineering relationship between inputs and outputs:Q = f ⎡NR, L, K, t, E⎤The production function gives the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Normal Profit?Normal profit, also known as “zero economic profit”, is the situation where a firm’s total revenue equals the combination of explicit and implicit costs. Total Revenue = Explicit + Implicit CostsNormal profit is unique from...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Marginal Revenue? Marginal revenue is the amount of value received by a seller for selling one more unit of product or service. Generally, marginal revenue is calculated by dividing total revenue by total quantity sold prior to sale of another unit. Then the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Cost Curve? Cost curves are graphs demonstrating the average variable, average total, and marginal costs of production. These graphs contain points that, when connected show the various cost patterns as curves. The graphs demonstrate how costs vary with...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is an Opportunity Set? An opportunity set is a group of potential options. In economics, the budget constraint model demonstrates the opportunity set, which includes the possible combinations of goods that can be purchased within the consumer’s budget. Budget...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Average Total Cost? Average total cost (sometimes referred to simply as average cost) is total cost divided by the quantity of output. Average total cost starts off relatively high, because at low levels of output total costs are dominated by the fixed cost....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Marginal Cost? Marginal cost is the additional cost of producing one more unit of output. It is not the cost per unit of all units produced, but only the next one (or next few). We calculate marginal cost by taking the change in total cost and dividing it by...
