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LAW OF COMPARATIVE ADVANTAGE: A basic principle that states every nation has a production activity that incurs a lower opportunity cost than that of another nation, which means that trade between the two nations can be beneficial to both if each specializes in the production of a good with lower relative opportunity cost. While this law is fundamental to the study of international trade, it also applies to other activities, especially the specialization and the division of labor.
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Lesson Contents
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Unit 1: The Basics |
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Unit 2: Three Totals |
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Unit 3: Four More Measures |
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Unit 4: Long-Run Cost |
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Unit 5: Previewing Supply | |
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Cost
- The first unit of this lesson, The Basics, begins this our study with a review of the opportunity cost notion and how it relates to business activity.
- In the second unit, Three Totals, we take a look at the three total cost measures, including total cost, total variable cost, and total fixed cost.
- The third unit, Four More Measures, then presents four additional cost measures -- average total cost, average variable cost, average fixed cost, and marginal cost.
- In the fourth unit, Long-Run Cost, we examine how scale economies and diseconomies affect cost in the long run.
- The fifth and final unit, Previewing Supply, then closes this lesson by previewing the importance of cost, especially marginal cost, to the supply decision by a firm.
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AVERAGE REVENUE PRODUCT CURVE A curve that graphically illustrates the relation between average revenue product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit revenue at each level of the variable input. The average revenue product curve is one of two related curves often used in the analysis of factor demand. The other, and more important, is marginal revenue product curve.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors trying to buy either a pair of leather sandals that won't cause blisters or clothing for your kitty cats. Be on the lookout for attractive cable television service repair people.
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This isn't me! What am I?
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Inside the ring or out, ain't nothing wrong with going down. It's staying down that's wrong. " -- Muhammad Ali
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JRE
Journal of Regulatory Economics
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