TwitterIntroductory Microeconomics Cost Formulas
Here is a list of some of the basic microeconomics formulas pertaining to revenues and costs of a firm. Remember when you're using these formulas there are a variety of assumptions, namely, that the the firm is profit-maximizing (making as much money as they can.)
Here are the basic formulas (work out your own algebra to find alternatives): Read the rest of this entry »
Happy New Year from DiscussEconomics
Wishing you and yours a Happy New Year! All the best in 2010. We will be here for another year adding great content to our economics and personal finance blogs, and news and articles in our econ forums.
How can Aggregate Demand and Aggregate Supply Explain GDP Movements?
When we describe GDP movements over the very long run we are concerned with economic growth over long periods of time--obviously. We use the production function with variable labour capital and technology, and consider issues such as what will change the rate of growth of output over very long periods. For this we would use the first diagram in the mid-term. The model that goes with this is AD-AS when the vertical AS curve is shifting outwards, as in Figure (b) below. Because the factors of production are increasing, the full employment level of output is increasing. Since economic growth over the very long-run averages a few percent per year, we know that the AS curve typically moves to the right by a few percent per year.
In the long run, we assume that capital and technology are fixed. Therefore, the AS curve is still vertical, but not moving, as in Figure (a). In Figure (a) we show the long run, where we assume that factors of production are fully employed but not changing, and the AS curve is vertical at the level of full employment output. Therefore, in the long run output is determined by aggregate supply alone. For a given AS curve, the price level is determined by the 'level of aggregate demand. If AD were to increase, the price level would increase, while the level of output would remain constant. This model would describe the GDP movements in the second diagram in the mid-term, where the long run growth rate is flat.
Merry Christmas From DiscussEconomics
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Diminishing Marginal Product of Labour
The assumption of diminishing marginal product of labour means that, in order to work more, workers must be offered a higher real wage. We can use this assumption to derive the labour demand curve.
This concept, the amount that output increases for a unit increase in labour input, is called the marginal product of labour (MPN). The MPN is given by the slope of the production function. This means that as labour use increases the amount of extra output that is gained from an increase in labour input becomes smaller. This is known as the diminishing marginal product of labour.
Given the diminishing marginal product of labour, if we graph the marginal product of labour against labour use, we would have a downward sloping curve. THis is illustrated in the figure below.
How Does Government Budget Deficit Impact Savings?
When we consider the Savings-Investment model what happens when the government runs a budget deficit and how does this impact the real rate of interest and savings (private)?
To explore this question we have to revisit the GDP model of Y = C + I + G + NI but ignoring net exports so we have Y - C - G = I. We will also explore this graph that assumes savings from consumers has increased.
Questions on How to Set your Own Financial Goals
Twenty Questions: Financial Planning
This article will cover several popular questions first time investors post. To start, here is question number 1: How much money is enough to retire/invest? Good question, have ever consider this while thinking how you will reach your financial goals.
- If only i could get a raise, or a better paying position, I could invest.
- If only my spouse could get work.
- If only my spouse could get a better paying job or a raise.
- Maybe I should get a second job.
- Life would be so much easier if I had a bit more money.
Haha, I liked the last one best. Frankly, consumerism in western culture has knocked some stupid in peoples heads. More and more advertising, etc., coupled with our own personal appetite for turning 'WANTS' into 'NEEDS', makes the desire for more money without end.
So does having more money make financial planning easier? Let's answer this question with a series of questions.
Mandatory Car Insurance so Adjust Your Premiums – Tips to Save
Insurance is one of the aspects of life that you hate to pay for and given the choice you wouldn’t bother. In fact, many Americans choose not to purchase any form of insurance when given a choice. Take for example healthcare, travel, life, and so on. Granted, most would purchase insurance in some cases (such as healthcare) if it was affordable to them, but the fact remains, if it’s not mandatory, insurance is not our first option to spend our money.
One of the forms of insurance that is mandatory is car insurance. There are a variety of different forms of car insurance that ranges from comprehensive packages covering damage to both yourself and others involved in an accident, vandalism, theft, and so forth. The list goes on with what you can cover but most people will at some point opt for the mandatory minimum level of coverage in order to drive. Read the rest of this entry »
Oil Sands in Alberta – How Baby Boomers are Squandering Everything
After the three brief articles on the Alberta oilsands, we thought it would make sense to post a video speaking about the other side of the energy market, the impact on environment and future generations. This is a brief yet poignant summary on what's in store for future generations in Alberta. Today we'll make a buck, tomorrow we'll have a legacy of destruction to recover from.
H2oil animated sequences from Dale Hayward on Vimeo.
OPEC’s Response to Alberta Oilsands Market Share – Part 3
This is part three of a three part series exploring the impact Alberta oilsands projects can have on world market price as dictated by OPEC. Click here for Part 1 and part 2.
OPEC's Response to an Expanding Oilsands Market Share
If the parameters stated above hold true, what particular market reactions could one expect from OPEC? If Alberta displaces the exports of Venezuela and Saudi Arabia, this will account for just over 4% of total OPEC production. Therefore the new question is: will OPEC attempt to recover their lost market share? Or is it possible that emerging markets elsewhere such as India or China will substitute for the lost market. It is impossible to speculate what future market trends will be, whether developing markets will in fact meet expectations when it comes to crude oil demand. One thing, however, is certain: OPEC will attempt to recover any losses if the US market was the most profitable market for them, and if it was the most accessible. Venezuela may be concerned with their diminished share; 2002 US exports accounted for about 37% of total national production. This number reaches almost 50% with the increase in future US demand, however, diminishes to about 42% once the oilsands 'steals' their share. Finding alternate markets with ease may be difficult for Venezuela in comparison with Saudi Arabia due to geographic location. Despite ideas OPEC may be willing to forego production in 2012 for future production, the loss of the Venezuelan market share may be enough to elicit a response from OPEC.
Any firm, or in this case cartel, rarely relinquishes established market shares without concern. What type of actions might OPEC take in attempt to recapture market share? As previously noted, the production cost of oilsands is much higher than conventional production with many OPEC members, namely those in the Middle East. It may be appealing for OPEC to flood the world with too much supply thereby reducing market prices, assuming the market responds the increase supply. Read the rest of this entry »