June 05, 2006

Midterm 1 Answers


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May 30, 2006

Getting Ready for Midterm 1

We are spending Tuesday and Wednesday getting ready for Midterm 1 on Thursday.

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The Phillips Curve

Keynesians and classical economists differ sharply in their explanation for business cycles.

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May 25, 2006

Aggregate Demand and Supply - The Keynesian Perspective

Keynesians focus on aggregate demand.

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May 24, 2006

The IS/LM Model

Assume that prices are fixed.

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A Simple IS/MP Model

We developed the Keynesian IS/LM Model assuming a fixed price level.

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May 23, 2006

The Keynesian Cross

The Simple Keynesian Model illustrates some basic points with the leanest possible structure.

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May 22, 2006

The Classical Model

We added the elements to complete the Classical Model.

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May 19, 2006

The Supply of Labor

We derived a supply of labor curve from utility maximizing behavior by workers. Our variation on the two goods - two prices diagram had consumption and leisure as the two arguments to the worker's utility function. Finding the utility maximizing level of leisure reveals the utility maximizing supply of labor.

We concluded with a backward-bending labor supply curve and a brief discussion of the welfare problem.

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May 18, 2006

A Simple Classical Model

Adding a vertical labor supply curve to our demand for labor produces a Simple Classical Model.

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Two Goods - Two Prices

The two goods - two prices model is the basis for the demand curve for a good. We reviewed this element of microeconomics as ground work for deriving the supply of labor.

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Profit Maximizing Quantity of Labor Hired

By viewing the firm's optimizing behavior in terms of the profit maximizing quantity of labor, we derived a demand for labor as a function of the real wage rate.

Adding a vertical supply of labor allowed us to construct a Simple Classical Model.

Posted by bparke at 10:09 PM | Comments (0)

May 17, 2006

Profit Maximizing Quantity of Output

To establish a connection with microeconomics, we began our discussion of the demand for labor by studying the profit maximizing level of output for a price taker and for a monopolist. The former case provides a nice explanation of the origins of the supply curve for the good the firm produces.

Posted by bparke at 10:06 PM | Comments (0)

Supply and Demand for Labor

We started the semester with a discussion of the supply and demand for labor.

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