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HOMOGENEOUS OF DEGREE ZERO: 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 0. In other words, for any changes in the independent variables, the dependent variable does not change. This is a special type of homogeneous equation.
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Lesson 14: Production | Unit 4: Long-Run Production
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Page: 22 of 25
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In this unit, you should have learned about:- The long run as the planning period in which all inputs, especially capital, are variable.
- How the long-run production is guided by returns to scale rather than the law of diminishing marginal returns.
- The three types of returns to scale -- increasing, decreasing, and constant.
- Why increasing returns to scale result from resource specialization, support activities, and the relation between volume and area.
- Why decreasing returns to scale result from management control and fixed external inputs.
- How constant returns to scale is the balance between increasing returns to scale and decreasing returns to scale, which gives rise to the minimum efficient scale.
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ASSUMPTIONS, CLASSICAL ECONOMICS Classical economics, especially as directed toward macroeconomics, relies on three key assumptions--flexible prices, Say's law, and saving-investment equality. Flexible prices ensure that markets adjust to equilibrium and eliminate shortages and surpluses. Say's law states that supply creates its own demand and means that enough income is generated by production to purchase the resulting production. The saving-investment equality ensures that any income leaked from consumption into saving is replaced by an equal amount of investment. Although of questionable realism, these three assumptions imply that the economy would operate at full employment.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale hoping to buy either galvanized steel storage shelves or a large green chalkboard shaped like the state of Maine. Be on the lookout for neighborhood pets, especially belligerent parrots.
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This isn't me! What am I?
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
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"Lord, where we are wrong, make us willing to change; where we are right, make us easy to live with. " -- Peter Marshall, US Senate chaplain
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M2
M1 plus savings types of near monies, including savings deposits, certificates of deposits, money market deposits, repurchase agreements, and Eurodollars
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