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DEMAND ELASTICITY AND TOTAL EXPENDITURE: The notion that price-induced changes in total expenditure for a good (price times quantity) depends on the relative price elasticity of demand. In particular, for relatively elastic demand (1 < E < ∞) changes in price cause total expenditure to change in the opposite direction. An increase in price causes total expenditure to fall and a decrease in price causes total expenditure to rise. For relatively inelastic demand (0 < E < 1) changes in price cause total expenditure to change in the same direction. An increase in price causes total expenditure to rise and a decrease in price causes total expenditure to fall. For unit elastic demand (E =1) price changes do not cause any change in total expenditure. Total expenditure is the same whether price increases or decreases.
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FIXED INPUT An input whose quantity cannot be changed in the time period under consideration. The relevant time period is usually termed the short run. The most common example of a fixed input is capital. The alternative to fixed input is variable input. A fixed input, such as capital, provides the "capacity" constraint for the short-run production of a firm. A variable input, such as labor, provides the means of changing short-run production. As larger quantities of a variable input are added to a fixed input, the variable input becomes less productive, which is the law of diminishing marginal returns.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time lost in your local discount super center wanting to buy either a T-shirt commemorating the first day of spring or a coffee cup commemorating last Friday (you know why). Be on the lookout for cardboard boxes.
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This isn't me! What am I?
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy." -- Martin Luther King, Jr.
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WLLN
Weak Law of Large Numbers
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