FINAL PREP extra info

Question 1

What is ISOQUANT? what is its shape of line

What is ISOCOST?what is its shape of line

Answer 1

ISOQUANT:
all combinations of two inputs that result in THE SAME level of output for given quantities.

its shape is reverse exponential

ISOCOST:
all combinations of two Inputs that result in the SAME COSTS (budget/price)

Straight with negative slope

Question 2

FORMULA: Marginal rate of Technical Substitution (MRTS)

Answer 2

MRTS = Slope of isoquant curve = ▲isoquant curve b/ ▲isoquant curve a

Question 3

What is a monopoly of violence?

Answer 3

government controlled policing that can either be abusive and corrupt (mexico, USSR) , or reasonably less corrupt (canada)

Question 4

What is formal defence?

Answer 4

the idea that if all markets were perfectly competitive, and supply and demand determined prices, then Price = marginal cost for all products and economy would be efficient

Question 5

What is informal defence

Answer 5

-Free markets provide automatic coordination of the actions of decentralized decision makers

-pursuit of profits in free markets provides a stimulus to innovation and growth of material living standards

-free markets permit a decentralization of economic power