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HOMOGENEOUS OF DEGREE N: A property of an equation the exists if independent variables are increased by a constant value, then the dependent variable is increased by the value raised to the power of n. The value of n can be greater than, less than, or equal to one. This property often surfaces in the analysis of production functions. If n = 1, then a doubling independent variables results in a doubling of the dependent variable and the production function has constant returns to scale. If n > 1, then a doubling independent variables results in more than a doubling of the dependent variable and the production function has increasing returns to scale. If n < 1, then a doubling independent variables results in less than a doubling of the dependent variable and the production function has decreasing returns to scale.
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Lesson 4: Production Possibilities | Unit 5: Investment
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Page: 19 of 24
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Investment is the tradeoff between consumption goods used for current satisfaction and capital goods that expand future productive capabilities.- Investment is not just putting money into the stock market. Investment is giving up current satisfaction to obtain greater future production, usually seen as giving up consumption goods to produce capital goods.
- Education and human capital that increase the productive skills and ability of labor.
- Exploration for mineral or fossil fuel deposits that add to land resources.
- Scientific research that expands technology and resource quality.
- The downside of investment is risk. There is no guarantee that you'll get something tomorrow.
Let's consider this basic tradeoff between capital and consumption.- Capital and consumption are the two basic types of goods needed for investment. If we produce more calibrators (capital), then we give up some jogging shoes (consumption).
- This tradeoff IS the fundamental act of investment. In the graph to the right, if we move from bundle A to E to I, we are giving up jogging shoes and getting calibrators.
We are investing!
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ELASTICITY ALTERNATIVES Five categories of elasticity that form a continuum indicating the relative responsiveness of a change in one variable (usually quantity demanded or quantity supplied) to a change in another variable (usually price). These five alternatives--perfectly elastic, relatively elastic, unit elastic, relatively inelastic, and perfectly inelastic--are most often used to categorize the price elasticity of demand and the price elasticity of supply.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius trying to buy either a T-shirt commemorating yesterday or a pair of handcrafted oven mitts. Be on the lookout for crowded shopping malls.
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This isn't me! What am I?
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Al Capone's business card said he was a used furniture dealer.
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"A leader, once convinced that a particular course of action is the right one, must . . . be undaunted when the going gets tough." -- President Ronald Reagan
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IPUMS
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