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Micro Economics
Chapte 27 microecnomics
10
Economics
11th Grade
02/25/2010

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Term
Derived Demand
Definition
where demand for one good or service occurs as a result of demand for another.
Term
marginal Product
Definition
is the extra output produced by one more unit of an input
Term
marginal revenue product
Definition
is the change in total revenue earned by a firm that results from employing one more unit of labor. It is a neoclassical model that determines, under some conditions, the optimal number of workers to employ at an exogenously determined market wage rate.
Term
marginal resource cost
Definition
Marginal costs are the costs a company incurs in producing one additional unit of a good.
Term
MRP=MRC rules
Definition
It will be profitable for a firm to produce up to the point at which that resource's MRP is equal to its MRC
Term
substitution effect
Definition
The link between personal preferences, consumption, and the demand curve is one of the most complex relations in economics. Implicitly, economists assume that anything purchased will be consumed, unless the purchase is for a productive activity.
Term
elasticity of resource demand
Definition
lasticity of Resource Demand refers to the relative change of resource demand caused by changes in resource price.
Term
least-cost combination of resources
Definition
The optimal combination of resources is achieved through cost-minimization and profit-maximization.
Term
profit-maximizing combination of resources
Definition
In competitive markets, a firm will realize the most profit maximizing combination when each input is employed up to the point at which its price equals its marginal revenue product:
Term
marginal productivity theory of income distribution
Definition
Economic concept that demand for labor is determined by its marginal productivity, and the wage rates are determined by the value of the marginal product of labor. Also called marginal productivity theory of income distribution.
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