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Welcome to EC 209: Managerial Economics- Group A By: Dr. Jacqueline Khorassani Study Guide Week Five (Note: You must go over these slides and complete every task outlined here before Thursday, October 4) 1 Don’t forget that • Aplia Assignment 2 – Due date is pushed back to before noon on Wednesday, October . – Don’t miss it. – To maximize your assignment grade, do the practice question first – The special tutorial on Monday will take place between 6 and 8 p.m. in Kirwan theatre. 2 Chapter 4: Applications of Indifference Curve Analysis 1. Buy one, Get One Free 2. Cash vs. In-kind Transfers 3. Labour-leisure choice – What is a budget constraint? • • Slope Shifts – How do wages affect labor supply? 3 Chapter 5: Production Analysis • What is a production function? • How is short-run different from long run? • What is the difference between fixed /variable factors of production? • What is a Cobb- Douglas production function? • What is a Leontief production function? 4 What are total, marginal and average product of labor or capital in the short run? • Definitions? • Graphs? • Increasing, Diminishing and Negative Marginal Returns 5 What should a manager do? • What is the value of marginal product? – How does that relate to the manager’s decision? 6 Long Run Production Function • Isoquant – What is it? – Shape? • Reasons for different shapes? – What is the marginal rate of technical substitution • Why does it diminish? 7 Cost in long run • Isocost – What is it? – Shape/slope? • Reasons? 8 Cost minimization • Rule? • Graph? • Optimal input substitution? – Graph? 9 Cost function in the short run • What are the different types of costs? – Graphs? 10 Cubic Cost Function • What is it? 11 Long Run Costs • Economies/diseconomies of scale – Sources? – Graph? 12 Multi-Product Cost Function • • • • What are they? What is the economies of scope? What is cost complementarity? What is the Quadratic Multi-Product Cost Function? 13