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Mankiw Model of Nominal Rigidities There are two related reasons for which firms do not frequently change prices. First, as we saw in the discussion on menu costs, the cost
What is increasing marginal cost? Felix’s marginal cost is greater the more lawns he has previously mowed. It is, every time he mows a lawn, the extra cost of doing still anoth
The Barcelona Football Club is considering the signing of a player of international fame. The problem is that the player has a reputation for having a weak knee. The probability th
(Only for extra credit) Consider Freddy on a rainy Thursday afternoon after losing in his favorite video game. His friend Tommy comes over to cheer him up and offers him the follow
Individual firm and market supply curves The quantities and prices in the supply schedule can be plotted on a graph. Such a graph is called the firm supply curve. A fir
Define theVariable factor of production The input level of a variable factor of production can be diverse in the short run. Raw material inputs are believed as variable fact
Significance of managerial economics Industrial and Business enterprises aim at earning maximum proceeds. In order to attain this objective, a managerial executive has to take
Hayek explaination Under a fractional reserves system, it is possible for the banking system to supply resources to entrepreneurs for investment in excess of resources that are
elasticity concepts occupies a central place in policy formulation explain in details
Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn
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