Links to Helpful Notes! (Unit 2)

Okay so I got some notes that I think are pretty helpful and CAPE-y so I'm linking cause it'll save me the trouble of doing it here >.>

So on the notezilla (<---click)  page you'll find notes for econ on the right...I think they have Classical Theory notes
and on the forum (<---click) page you'll find a summary of monetary policy that's very cramable and an unemployment powerpoint.

Have fun people, comment if it's anything I'll try my best to answer questions and take requests and stuff (no promises though >.>)

Past Paper Question: 2009 Question 5

Ok so this question falls under the topic "The Demand for and Supply of Factors". It's a pretty common and easy enough question that they like to repeat, so look out for it, it's pretty easy marks too so if you understand it I think you should do it.
Of course I have no idea if this is correct so comment and tell me how much I suck if I mess it up. Also this was before they re-did the mark scheme so it was worth 50 marks instead of 25, you can just divide it to get a rough estimate on how much it's worth now.
*Answers are in this colour
*Comments made by me are in this colour :D 
God...I hope this doesn't get too confusing

(a)(i) State the formula for computing each of the following:
              a) Marginal Physical Product of Labour (MPP) (2 marks)
                  MPP = change in TPP(units of output) / change in quantity (labour input)
              b)Average Physical Product of Labour (APP) (2 marks)
                 APP = TPP (units of output) / quantity (labour input)
*these (a & b) may look a bit familiar (hopefully) that's cause you learned it already in module 1 in supply, yeah it's the same thing, they just added the word labour. 
             c)Value of the Marginal Product (VMP) (2 marks)
                VMP = MPP x price per unit

   (ii)The table below shows the output and wage rate for six units of labour (input).On the answer sheet provided, complete the table assuming that the price of the product is $100 per unit and the wage rate is $200. (18 marks)

LABOUR PRODUCTIVITY AND WAGES

Labour Input (L)	Units of Output (Q)	Marginal Physical Product of Labour (MPP)	Average Physical Product of Labour (APP)	Value of MPP (VMP)	Wage Rate (W)
0	0	0	0	0	$200
1	8	8	8	800	$200
2	21	13	10.5	1300	$200
3	27	6	9	600	$200
4	31	4	7.75	400	$200
5	33	2	6.6	200	$200
6	34	1	5.7	100	$200

(b)(i) Plot the labour demand curve and the wage rate on the same diagram (15 marks) (labour demand curve = VMP and i'm not plotting it cause i'm lazy so take a sketch).

(ii) Determine the number of units that the firm will employ and explain why. (7 marks)

5. they'll employ 5 because the point at which the VMP = marginal fixed cost (in this case the MFC is the wage rate) is the most optimum point as it maximises production.  You see that candy corn shaped space under the VMP and above the wage rate? That's the amount of revenue you are making when you minus the cost of wages. So we'll be making money till the VMP intersects the wage rate.

(iii) If the worker become unionised and their trade union successfully bargains for a wage rate of $400 (a 100% increase, how many workers will now be employed?

4. Because the wage rate increases so the equilibrium increases until the VMP is at 400, so the demand for labour falls. 

You see all that crap about 100% increase and trade unions? That's just there to confuse you... all you needed to take out of this was that the wage rate is $400 now. 

Goals of the Firm (Everything else that's not Profit Maximisation)

Of course there are lots of other reasons a firm will want to stay in business other than making profits (we're not that materialistic). Here are some other factors that might motivate a firm to stick around other than making profits (although they all tend to come back to profit making anyway):

1. Growth - growth is typically a long term goal that involves expanding the organisation. We businesses grow they benefit from economies of scale and will end up making more profit. 
2. Sales Maximisation - This goal involves selling as much of the product as possible, not actually focusing on making a profit (you might end up making less since you might drop the price too low). Why the hell would you do this? Well some managers and employees get paid according to how much stuff they sell or the firms sales revenue, not necessarily the profit. Also by dropping prices and increasing sales, the firm attracts customers so you get a larger market share and more prestige n shit. 
3. Market Dominance - This is where you wanna be the very best like no one ever...is...currently in the market. You wanna freaking DOMINATE. You want everyone buying your shit. Of course this doesn't necessarily mean you have a monopoly, just that you have the largest market share. 
4. Satisficing - this is basically when the firm tries to achieve a satisfactory level of a attainment of a number of objectives....like the bar minimum to keep you going. You typically see this with startups or new firms who just wanna survive a month. So maybe instead of planning world domination they just wanna make their normal profit of $2000 this month and maybe get 10 more customers. Sometimes you can have conflicting goals though; you might want to maximise your sales and your profits, you see why this can't happen right? You'd sell more if you drop your price below the profit maximisation level...so it doesn't always workout and you may just end up coming to a compromise of 

There are other things firms might want to do like improve people's lives n shit but that's not really important here. 

Goals of the Firm - Profit Maximisation

Unit 1 > Module 2 > Topic 1

The goals of the firm are basically what the firm aims to do by staying in business; it’s their purpose. A firm may have several goals, but typically has a main thing they strive for, some popular aims are:

1. Profit Maximization

• Normal Profit - This is the minimum amount of profit necessary to entice the firm to keep producing. Typically it’s determined by the amount of money the entrepreneur is foregoing by setting up his own business. It’s the amount of money he could be making working the next best job.  So if someone makes $5000 a month working as a clerk and they decide to set up their own store they need to make at least $5000 in profit or else they might as well go back to being a sales clerk since it’s more profitable.

• Abnormal Profit - This is anything in excess of the normal profit, it’s the extra. 

This is typically the main thing that keeps a firm in business; entrepreneurs try to make largest profit they can as a reward for the risk of entrepreneurship. It serves as motivation to the firm to stay in business and naturally you’ll try to make the biggest profit you can. There are two types of profit:

The profit maximization level is the point where profits cannot be increased further, at this point marginal revenue is equal to marginal cost.

retarded MS paint graph *shame*

q1 = MR > MC at this point the revenue from producing one more unit is greater than the cost of producing one more unit so the firm should there increase production to maximise profit until you get to point q

q2 = MR < MC at this point the cost of producing another unit is higher than the revenue you make from it, you’re making a loss and should therefore cut back production until you get to point q

q = MR = MC profit maximisation! this is the optimum point where you’re making as much profit as you can and you shouldn’t change a thing cause you’ll mess it up. 

Hello There =]

I promised a econ blog since last year but never got around to it, mainly because I was lazy, so here it is! Finally... I'll be posting econ notes (mainly summaries) for the next two weeks because I have exams and I didn't study so this is my way of forcing myself to study by convincing myself that people need me.  >.>
Leave a comment if you have any comments (duh) or requests and I'll get back to you asap, good luck in exams everyone!