question

Elasticity equation

answer

(Derivative Q/Derivative P) x (P/Q)

question

Income Elasticity

answer

E>0=nominal good; E<0=inferior good

question

Cross-Price Elasticity of Demand

answer

E>0=substitutes; E<0=complements

question

Marginal Utility equation

answer

change in total utility/change in quantity

question

marginal rate of substitution

answer

MUx/MUy=Px/Py

question

Substitution effect

answer

One good relatively cheaper and one good relatively more expensive

question

Income Effect

answer

Feel richer or poorer due to price change

question

Intermediate point

answer

New prices, old utility

question

Lagrange Method equation

answer

U(X,Y)-**symbol**(PxX+PyY-I)

question

Expected Value equation

answer

Sum (probability of outcome)(payoff)

question

Expected Utility equation

answer

Sum (probability of outcome)(utility)

question

Certainty Equivalent

answer

The amount of for sure money that gives the same expected utility as the gamble's expected utility

question

Risk Premium equation

answer

Expected value of game 0 certainty equivalent

question

Average Product of Labor equation

answer

q/L

question

Marginal Rate of Technical Substitution equation

answer

MPL/MPK

question

Economic Costs equation

answer

Accounting costs + implicit opportunity costs

question

Marginal Cost equation

answer

W/MPL

question

Average Total Cost equation

answer

TC/q

question

User Cost of Capital equation

answer

Depreciation + interest forgone

question

Interest Forgone equation

answer

Interest rate x cost

question

Rental Rate equation

answer

Depreciation rate + interest rate

question

Depreciation Rate equation

answer

Depreciation/cost

question

Total Cost equation

answer

ML+rK

question

Economies of Scope

answer

(C(q1)+C(q2)-C(q1,q2))/C(q1,q2)

question

Returns of scale

answer

Inputs and outputs, inputs have same ratio, has economies of scale

question

Economies of Scale

answer

Output and cost, inputs change in any matter, easier to achieve

question

LAC decreases at first because

answer

Specialization, flexibility of scale, inputs are cheaper in bulk

question

LAC increases later because

answer

Limited space, machines, management issues

question

How to reduce risk?

answer

Diversification and mutual funds

question

Perfect Substitutes

answer

Has linear isoquants with a constant MRTS

question

Perfect Complements

answer

90 degree angle isoquants

question

Risk Averse

answer

Square root

question

Risk Neutral

answer

Linear with Marginal Utility constant

question

Risk Loving

answer

Exponential

question

Diseconomies of Scale

answer

SC<0

question

Cost minimization

answer

MPL/MPK=w/r

question

Sunk Costs

answer

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