Microecon chapter 8 Flashcards
1
Q
MPK and K relation
A
Negative
2
Q
MPL and L relation
A
Negative
3
Q
Long-run cost minimization
A
MPK/PK = MPL/PL
4
Q
Factors in SR
A
Fixed
5
Q
Factors in LR
A
Production variable
6
Q
Factors in VLR
A
Same as LR + technologically variable
7
Q
LRAC
A
Minimum possible in the LR (curves from the AC minimums)
8
Q
Increasing revenue to scale
A
%Δoutput > %Δinput (LRAC↓)
9
Q
Decreasing revenue to scale
A
%Δoutput < %Δinput (LRAC↑)
10
Q
Constant revenue to scale
A
%Δoutput = %Δinput (No Δ in LRAC) -> MES
11
Q
What causes VLR
A
Technological change
12
Q
Technological changes (3)
A
- New techniques
- Improved input
- New product
13
Q
MPL formula
A
ΔQ/ΔL (K constant)
14
Q
MPK formula
A
ΔQ/ΔK (constant L)
15
Q
Marginal revenue product in perfect competition (2)
A
- MRPL = MPL x MR
- MRPK = MPK x MR
