Economics Learning @[email protected]
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The curve below represents producer surplus.
The angle 'PS' is the area of the producer surplus....
Producer surplus represents the difference between the price received by producers for goods and services and the expected price of producer for these goods and services.
Suppose that ,the market price of a product is $13 and the expected price of this product is $10.
Producer surplus=$13- $10=$3
If the quantity of this product 5
Producer surplus=Price ×Quantity
=$3×5
=$15.
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The below curve shows the supply and demand of labour in the labour market.
The quantity of labour is on the horizontal axis and wage is on the vertical axis.
Labour Demand means that employers demand for labour and supply of labour means that Employees provide labour to the labour market.
Demand for the labour curve is downward sloping and supply for the labour curve is upward sloping.
Labour demand and supply are equal at Ew.This is equilibrium wage.
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MRTS (Marginal Rate Of Technical Substitution) is the slope of isoquant.The slope of isoquant shows how one input can be substituted by one another input to provide the same level of output in the production process.
When one input increases,the other decreases and one input decreases,the other input increases.
So we can say that isoquant shows the various combinations of input that provide the same level of output .
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