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In mainstream economic theories, the labour supply is the total hours (adjusted for intensity of effort) that workers wish to work at a given real wage rate. It is frequently represented graphically by a labour supply curve, which shows hypothetical wage rates plotted vertically and the amount of labour that an individual or group of ...
The labour supply curve shows how changes in real wage rates might affect the number of hours worked by employees.. In economics, a backward-bending supply curve of labour, or backward-bending labour supply curve, is a graphical device showing a situation in which as real (inflation-corrected) wages increase beyond a certain level, people will substitute time previously devoted for paid work ...
The 45-degree line represents an aggregate supply curve which embodies the idea that, as long as the economy is operating at less than full employment, anything demanded will be supplied. Aggregate expenditure and aggregate income are measured by dividing the money value of all goods produced in the economy in a given year by a price index.
To derive MC the first derivative of the total cost function is taken. For example, assume cost, C, equals 420 + 60Q + Q 2. then MC = 60 + 2Q. [11] Equating MR to MC and solving for Q gives Q = 20. So 20 is the profit-maximizing quantity: to find the profit-maximizing price simply plug the value of Q into the inverse demand equation and solve ...
Isocost v. isoquant graph. Each line segment is an isocost line representing one particular level of total input costs, denoted TC, with P L being the unit price of labor and P K the unit price of physical capital. The convex curves are isoquants, each showing various combinations of input usages that would give the particular output level ...
where is the quantity demanded, is the quantity supplied, P is the price, a and c are intercept parameters determined by exogenous influences on demand and supply respectively, b < 0 is the reciprocal of the slope of the demand curve, and g is the reciprocal of the slope of the supply curve; g > 0 if the supply curve is upward sloped, g = 0 if ...
Supply is often plotted graphically as a supply curve, with the price per unit on the vertical axis and quantity supplied as a function of price on the horizontal axis. This reversal of the usual position of the dependent variable and the independent variable is an unfortunate but standard convention.
The equation demonstrates that the change in the demand for a good, caused by a price change, is the result of two effects: a substitution effect : when the price of good changes, as it becomes relatively cheaper, if hypothetically consumer's consumption remains same, income would be freed up which could be spent on a combination of each or ...