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The Keynesian cross diagram is a formulation of the central ideas in Keynes' General Theory of Employment, Interest and Money.It first appeared as a central component of macroeconomic theory as it was taught by Paul Samuelson in his textbook, Economics: An Introductory Analysis.
We can be sure this setup gives us the equilibrium levels as neither firm has an incentive to change their level of output as doing so will harm the firm at the benefit of their rival. Now substituting in q ∗ {\displaystyle q^{*}} for q 1 , q 2 {\displaystyle q_{1},q_{2}} and solving we obtain the symmetric (same for each firm) output ...
The Nash Equilibrium in the Bertrand model is the mutual best response; an equilibrium where neither firm has an incentive to deviate from it. As illustrated in the Diagram 2, the Bertrand-Nash equilibrium occurs when the best response function for both firm's intersects at the point, where P 1 N = P 2 N = M C {\displaystyle P_{1}^{N}=P_{2}^{N ...
In chemistry, the lever rule is a formula used to determine the mole fraction (x i) or the mass fraction (w i) of each phase of a binary equilibrium phase diagram.It can be used to determine the fraction of liquid and solid phases for a given binary composition and temperature that is between the liquidus and solidus line.
The firm which produces at this output level is said to maximize profits. If the output produced is less than the equilibrium quantity (), as shown in the red part, then is greater than (>), and the profit is not maximized. The firm has in its interest to raise its output level to maximize profits, because the revenue gained will be more than ...
A Lindahl equilibrium is a state of economic equilibrium under a Lindahl tax as well as a method for finding the optimum level for the supply of public goods or services that happens when the total per-unit price paid by each individual equals the total per-unit cost of the public good.
In the case of two goods and two individuals, the contract curve can be found as follows. Here refers to the final amount of good 2 allocated to person 1, etc., and refer to the final levels of utility experienced by person 1 and person 2 respectively, refers to the level of utility that person 2 would receive from the initial allocation without trading at all, and and refer to the fixed total ...
The relevant variables are p, w, x, and f(x). p is the price of the output, w is the price of the input, f(x) is the amount of output, and x is the amount of input. Thus, the profit-function can be written as the following: