Microeconomics (Christopher T.S. Ragan) (z-lib.org)

The capital market connects households’ saving decisions with firms’ borrowing decisions. Households save some part of their inc ...

crates per day, doing so with two machines and eight workers is technically efficient, but so is using four machines and two wor ...

In this chapter, we look first at firms’ demand for physical capital, which leads us to understand their demand for financial ca ...

If it is possible to substitute one factor for another to keep output constant while reducing total cost, the firm is currently ...

we determine how much a firm would be willing to pay to purchase a piece of capital equipment. This takes us to the concept of p ...

is 20 units of output and the price of one unit of labour is $2. Then we have Thus, the last dollar spent on capital adds only 4 ...

15.2 Present Value Suppose a firm buys a piece of capital equipment and thereby obtains the use of that equipment until it wears ...

Oil is a very important input in many industries. Increases in the price of oil will lead profit-maximizing firms to substitute ...

In what follows, we simplify our discussion by assuming that the future benefits from a piece of capital equipment are known wit ...

compares to the cost of an additional unit of labour. If the two sides of Equation 8-2 are the same, then the firm cannot make a ...

Table15-1 The Present Value of a Single Sum One Year in the Future Anyone who lends out $95.24 for one year at 5 percent interes ...

Methods of production will change if the relative prices of factors change. Relatively more of the cheaper factor and relatively ...

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these countries are inefficient because they are using methods long ago discarded in the West is missing the truth about efficie ...

Several Periods in the Future Now we know how to calculate the present value of a single sum that is receivable one year in the ...

Our final example involves a cross-country comparison of how firms substitute between capital and electricity. In North America, ...

Table15-2 The Present Value of a Single Sum Several Years in the Future Table 15-2 computes the present value of an MRP of $500 ...

Figure 8-1 A “Saucer-Shaped” Long-Run Average Cost Curve Long-Run Cost Curves We have been discussing a firm’s cost-minimizing c ...

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The long-run average cost (LRAC) curve is the boundary between attainable and unattainable levels of costs. If the firm wants to ...