# Questions tagged [producer-theory]

Study of the behavior of firms in organizing their production and allocating productive resources.

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### How useful are basic economics (elasticity / consumer & producer theory) in real life?

I am thinking how these concepts will be applied in the industries / at a job. For example I could see elasticity as useful in projecting the outcomes of supply ...
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### How do you calculate the contribution of each factor of production to the value of the final product?

How do I determine how much value that capital, labor, and land individually contributed to the value of a firm/good? Like what % of value came from capital vs labor vs land? I heard that this is ...
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2 answers
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### Lerner Index Interpretation?

How do you interpret the Lerner Index? I ask because at Uni. we have been told that, for monopoly, when the producer max. his profit, he sets the price such as the demand is elastic and the lerner ...
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6 votes
1 answer
610 views

### Fixed cost of a firm

Suppose that a firm has a total cost function given by: $TC(q) = \frac{5}{q+1} + 5 + 5q + q^2$. What is the fixed cost? I seem to be able to come up with two "answers", which cannot be correct. My ...
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### Delaying wages in response to slack?

I'm reading a book about the economic development of South Korea during the 'miracle' period. One of the points the author makes is the following: A major source of industrial disputes was ...
1 vote
0 answers
870 views

### Shape of Isoprofit Curves for Strategic Complements

Two goods are strategic complements if: $$\frac{\partial \pi_1}{\partial q_2}>0\;\text{and}\;\frac{\partial \pi_2}{\partial q_1}>0$$ The image below is a picture of best response functions and ...
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1 vote
1 answer
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### Retailer Price Setting for Existing Inventory in the Event of an Increase in Price Paid for the Good

If you are a retailer, and the price you pay for one of your retail goods goes up, how do you price the inventory you already had (which you paid a lower price for)? Here is an example of a TFD (True,...
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11 votes
5 answers
2k views

### Are There Giffen Inputs?

I am studying for my candidacy exams and I came across this question on a previous exam. The question is in the TFD (True, False, Debatable) section of the exam. The claim is: There are no Giffen ...
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2 votes
2 answers
131 views

### What would make a restaurant offer all-day breakfast?

Some restaurants particularly fast food ones offer breakfast food only during, well, breakfast hours. Other restaurants however offer breakfast food throughout their opening hours. Some restaurants ...
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2 votes
1 answer
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### Producer's cost for buying full solution vs. buying parts

This may be a very basic question. From a producer's standpoint, what are the theoretical or empirical results on the comparison of cost between buying assembled or full solutions from suppliers vs. ...
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2 answers
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### Does the contract curve always have to connect the initial points on an edgeworth box? Why or why not?

What if the contract curve goes out of bounds? In that case, do I assume it superimposes itself on the axes it is closest to? I hope this was clear. Not sure how to explain this other than visually......
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3 votes
2 answers
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### Why are some goods without close substitutes not sold in some countries?

Especially in consumer electronics, a large number of goods are offered only in some countries. Usually this holds only for products which have some close substitutes available (e.g., screens, where a ...
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4 votes
1 answer
452 views