Class summary 11/14

each point of curve tells how much the marginal opportunity cost of producing that particular unit

there might be a little vertical line at point "0"

slope up--> cost more to make more

people always do the cheapest thing first

M. O. C =marginal opportunity cost (at one point)

total cost=marginal cost of all the products added up

total revenue=P*Q

producer surplus (doesn't equal to profits)

total revenue-total cost (triangle above the line)

law of supply is not unchangeable (labor). for individual, it is downward sloping

why does slope goes up? (cost more to produce more?)

diminishing returns production (easier to make the first than one more)  eg: farming (riche soils, 2nd rich, ...*technology: still needs more resources)

           

quantity supplied VS supply

major factors that impacts supply

change in input (land, labor, capital)

expectation that changes supply (expect price goes up, reduce supply; expect price goes down, sell the product)

technology changes in other markets (if changes in other market, might change in own market)

            elasticity

            price elasticity=%quantity supplied/%price of the good

            >1-->elastic; <1-->inelastic

            flat slope: relatively elastic; steep slope: relatively inelasticity

            availability of substitutes impacts elasticity of supply

            add up individuals-->market supply (more flatter than usual)

            marginal VS average costs: sell more only when MC<MR