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Economic Category:
Production and Firm Behavior
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2.
Comparative Advantage
Introduces David Ricardo's principle of comparative advantage. B means of example, shows how specialization and trade result in more output. [Details...]
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6.
Monopoly
A monopoly is an industry in which there is one seller. Because it is the only seller, the monopolist faces a downward-sloping demand curve, the industry demand curve. This article explains whether a monopoly is desirable or not. [Details...]
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7.
Production - The Cowles Contributions
Here we shall consider the Neo-Walrasian theory of production developed by Tjalling C. Koopmans (1951) among others at the Cowles Commission during the 1940s and 1950s which relies heavily on use of activity analysis and convexity theory, notably the Separating Hyperplane Theorem. The more traditional Neoclassical theory of production is surveyed elsewhere. [Details...]
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8.
Production Possibilities
This in depth description of production possibilities gives a detailed account of what happens to the graphs and explains the shifts that occur. [Details...]
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9.
Returns to Scale
This article covers understanding returns to scale, Euler's theorem, homogeneity and hometheticity, and the intensive production function. [Details...]
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10.
Supply and Demand
Describes how the price level is determined by the crossing of the supply and demand curves, and how a shift in supply or demand will influence the equilibrium price and quantity. [Details...]
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12.
The Austrian Theory of Capital
This article covers Capital and Time, Jevons's Amount of Investment, Bohm-Bawerk's Average Period of Production, Wicksell's Optimal Production Period, Hayek's Disequilibrium Theory, Hicks's Flows, and Debates on Austrian Capital Theory. [Details...]
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13.
The Cost Function
This article covers the cost function, the derived demand for factors, factor price effects, output effects, costs and returns to scale, and factor price frontiers. [Details...]
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14.
The Elasticity of Substitution
This article covers measuring substitutability, elasticity of substitution under constant returns to scale, Cobb-Douglas production functions, constant elasticity of substitution (CES) production functions, and elasticities of substitution in multi-input cases. [Details...]
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18.
The Production Function
This page covers the production function, marginal productivity, the law of diminishing returns, the law of variable proportions, and isoquant analysis. [Details...]
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21.
The Supply Curve
This article gives a brief indroduction and description of the supply curve and provides a table and graph for demonstration. [Details...]
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22.
The Theory of Investment
This article covers Capital versus Investment, Irving Fisher's Theory of Investment, The Clark-Knight-Ramsey Crusonia, John Maynard Keynes's Internal Rate of Return, Jorgensen's Optimization Theory, Marginal Adjustment Costs and Tobin's q, and The Aftalion-Clark Accelerator.
[Details...]
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24.
Average Cost
This tutorial discusses average cost, gives some typical uses of the average cost concept, and shows the distinction between average cost and marginal cost. [Details...]
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25.
Comparative Advantage
The linear production possibilities frontier is shown to be a restraint/constraint and, it explains scarcity and quantitatively defines opportunity cost. The model assumes there are two goods, a fixed resource endowment and a known level of technological expertise in production. [Details...]
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26.
Cost Concepts
This tutorial introduces economics concepts of total cost, fixed cost, variable cost, and marginal cost. [Details...]
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27.
Cost Concepts
This tutorial introduces economics concepts of total cost, fixed cost, variable cost, and marginal cost.
Firms use these cost concepts for pricing and output decisions. These concepts form the basis for much of cost accounting.
[Details...]
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28.
Cost Function
Click on a point on the total cost function to see more about how to visualize and quantify unit costs (AC and MC) from the total cost function. [Details...]
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29.
Cost Functions
Click on Lesson 2. This site explains Average fixed costs and average variable costs through graphical illustrations and movies showing the transformations.This tutorial is designed to teach about a very important part of Principles of Microeconomics, the cost functions! These functions are designed to help students understand the costs of production from different perspectives:; cost per unit versus total cost; explicit vs. implicit cost; deriving fixed, variable and total cost per unit; deriving average fixed, average variable and average total cost per unit; understanding and creating graphs for all the cost curves.
[Details...]
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32.
Economics General - Markets
Listing of topics on demand, supply, prices, and markets, with available resources ranging from tutorials, articles, and case studies, to worksheets and sample problems. [Details...]
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33.
Lemonade Stand
This applet allows you to control all aspects of your Lemonade Stand, from pricing, to quality control, to purchasing your necessary inventory, all while dealing with unpredictable weather, picky customers, and inventory wastes.
[Details...]
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42.
Enterprise Restructuring in the former Soviet Union
Citizens of the countries of the former Soviet Union (FSU) have recognized the potential benefits, observed in many different cultures and societies around the world, of private, market-driven enterprises. For more than half a century enterprises in the FSU have been subject to comprehensive state ownership and central planning. Prices and financing were typically of little concern to enterprise management, while workers did not have to worry about job security and received a wide range of social benefits through enterprises. While moving toward private, market-driven enterprises offers great promise for an improved standard of living for the average person, such a transition represents a fundamental social, psychological, and economic challenge. [Details...]
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43.
Unemployment in Eastern and Central Europe
Unemployment, once unknown and illegal in the formerly communist regimes in eastern and central Europe, has become a significant social and economic phenomenon. The rise in unemployment rates has been large but varied across countries. The transition from centrally planned economies to market-oriented economies has produced significant reductions in employment in the state sector as consumer-driven incentives begin to influence industrial structure. Reductions in employment in the state sector were partially offset by reductions in labor force particpation. Differences in the decline in labor force participation among countries led to significant differences in the relationship between unemployment growth and contraction in employment. However, the decline in labor force participation seems to be concentrated in the early stages of the transition, and in the future declining labor force participation is not likely to play as significant a role in dampening the growth of unemployment. [Details...]
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44.
Lecture Notes in Microeconomic Theory
This short book contains my lecture notes for the first quarter of a microeconomics course for PhD or Master's degree economics students. The lecture notes were developed over a period of almost 15 years during which I taught the course, or parts of it, at Tel Aviv, Princeton, and New York universities. [Details...]
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45.
Neoclassical Theories of Production
A collection of articles providing a comprehensive coverage of the theory of production. The following topics are covered: the production function, returns to scale, technology and substitution, the elasticity of substitution, the production decision, the cost function, the profit function, production in general equilibrium theory, the neoclassical theory of distribution, the opportunity costs, theory of capital and investment, and the theory of the firm. [Details...]
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47.
A Production Possibilities Frontier Experiment: Links and Smiles
In the teaching of college and advanced placement economics, some of the characteristics of the production possibility frontier (PPF) are as difficult to convey as they are important to understand. John Neral and Margaret Ray (1995) suggest a useful and instructive classroom experiment in which two products, "widgets" and "whajamas," are produced to study tradeoffs between outputs. Tearing a piece of paper in half, folding it twice, and stapling it creates a widget; folding the paper three times makes a whajama. We have designed the links and smiles experiment to incorporate one of the most challenging concepts to grasp in relation to the PPF--the specialization of inputs. Of course, it is this crucial factor that results in the increasing opportunity cost of production and the concave shape of the production frontier. [Details...]
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48.
A Production and Cost Experiment for Use in the Principles of Microeconomics
This paper presents a new, hands-on production and cost experiment that instructors can use in principles of microeconomics to introduce the fundamental concepts of revenues, production, and costs. The experiment provides an opportunity for the students to become directly involved in a production process (with incentives to maximize profits), and then facilitates the derivation of the production function and all of the standard short-run cost relationships based on data that the class generated. Students assimilate the theory more rapidly and comprehensively this way, allowing the instructor to cover these issues more effectively in preparation for their application in the market models. However, careful construction can also provide empirical exposure to quality control, innovations in production, specialization of labor, just-in-time delivery, etc. Several microeconomics experiments have been presented by others to explain supply and demand, collusion, scarcity, and monopoly behavior. This paper introduces a comprehensive new experiment to identify cost curves and production concepts similar to others available on this site and elsewhere, but more extensive in its coverage and flexibility. [Details...]
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50.
Streamlining Production Possibilities Frontier Experiments
Numerous classroom experiments involve the production of fictional goods. For example, Anderson and Chasey (1999) describe an experiment in which students produce two different products, widgets and whajamas, while Neral (1993) describes an experiment in which students produce widgets. In both of these experiments the fictional good is created with student labor and a variety of office supplies, including paper, pens or pencils, and staplers. While these experiments tend to be both entertaining and enlightening for the student participants, they are time consuming to prepare[1] and make an enormous mess! Fortunately, there is a way to maintain the educational content of these experiments without creating all the waste. [Details...]
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51.
Sunk Cost and Marginal Cost: An Auction Experiment
The concepts of sunk and marginal costs can be difficult to get across to students. To do so, I employ an experiment that involves auctioning dollar bills in class. I tell the students that I will be auctioning dollar bills the next class period and to bring change if they are interested in participating. I impress upon them: there is no catch, I will be auctioning off genuine U.S. one dollar bills, each bill will be sold to the highest bidder, and I will auction off at least two dollar bills--more if there is sufficient interest. [Details...]
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52.
Widget Production in the Classroom
For many students, the standard principles-level treatment of production and cost is an incomprehensible maze of definitions and formulas, all of which can be very difficult to relate to real world production relationships. The following classroom exercise can be helpful in bridging this gap between theory and experience.
[Details...]
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54.
How Cost of Production Affects Supply
Discussion on costs, oppurtunity costs, expicit costs, implicit costs, accounting profit, economic profit, fixed costs, variable costs, marginal costs, economies of scale, and diseconomies of scale. [Details...]
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56.
Monopoly
Discussion on monopoly including profit, barriers to entry, regualted monopolies, and ineffeciency. [Details...]
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57.
Oligopoly
Discussion on the kinked demand curve, profit, collusive pricing, price leaders, restricted oligopolies, and progressive oligopolies. [Details...]
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