Ucl Econ 100% Passed
economic rent A payment or other benefit received above and beyond what the individual would have received in his or her next best alternative (or reservation option) isocost line A line that represents all combinations that cost a given total amount cost of production equation c = (wL) + (pR) isocost line slope - (w/p) Diagram: Production Function-diminishing average product of labour Malthus argument as diagram Malthusian problem His model does not take account of the possibility a persistent positive technology shock that may offset the diminishing average product of labour (There are only 2 goods in the economy) What happens if the substitution effect is bigger than income effect, and if the price of good 1 decreases the consumption of good 2 decreases Is the income effect positive or negative on consumption
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