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LABOR-LEISURE TRADEOFF: The perpetual tradeoff faced by human beings between the amount of time spent engaged in wage-paying productive work and satisfaction-generating leisure activities. The key to this tradeoff is a comparison between the wage received from working and the amount of satisfaction generated from leisure. Such a comparison generally means that a higher wage entices people to spend more time working, which entails a positively sloped labor supply curve. However, the backward-bending labor supply curve results when a higher wage actually entices people to work less and to "consume" more leisure time.
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Lesson 18: Monopoly | Unit 3: Output
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Page: 18 of 30
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- Examining the profit-maximizing production level using the total revenue and total cost curves:
- Total Revenue: The first curve to note is the total revenue curve, labeled TR.
- Total Cost: The second curve in the graph is the total cost curve, labeled TC.
- Profit is the difference between total revenue and total cost, which is visually seen as the vertical distance between the two curves.
- Notice that the total revenue and total cost curves intersect at two quantities -- between 2 and 3 units and between 8 and 9 units.
- Both quantities are termed breakeven output.
- Breakeven output is the quantity of output in which the total revenue is equal to total cost such that a firm earns exactly a normal profit, but receives no economic profit nor incurs an economic loss.
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SCREENING When confronted by asymmetric information, the use of small bits of information, or indicators, that suggest more comprehensive information. Screening occurs when those with limited information try to identify indicators suggesting more complete information. It is used in markets with adverse selection and moral hazard, especially in labor markets and in the provision of insurance. Common methods of screening include aptitude tests, affiliations, past behavior, and personal characteristics. A related method is signalling.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages trying to buy either a velvet painting of Elvis Presley or a wall poster commemorating yesterday. Be on the lookout for vindictive digital clocks with revenge on their minds.
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This isn't me! What am I?
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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AIC
Akaike's Information Criterion
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