Ramsey–Cass–Koopmans growth model is a neo-classical model of economic growth. It explicitly models the choice of consumption at a point in time. And it has made the savings rate endogenous.
Monetarism is an economic school of thought that stresses the primary importance of the money supply in determining nominal GDP and price levels. It challenges Keynesian economics by arguing that monetary policy, not fiscal policy, should be used to stabilize the economy. Monetarists believe the central bank should target money supply growth and follow fixed rules, rather than have discretion, as monetary factors are more important than fiscal interventions in impacting economic outcomes.
This document discusses offer curves and how they can be used to analyze international trade. It contains the following key points:
1) An offer curve graphically represents the quantities of one good a country is willing to export in exchange for imports of another good at different price ratios, or terms of trade.
2) The derivation of a country's offer curve involves plotting its domestic cost line and determining the export-import combinations it can trade at different terms of trade.
3) The intersection of two countries' offer curves determines the terms of trade and trade quantities that will result from free trade between them. Shifts in the curves can also change the trade outcomes.
4) Gains from trade exist when
Patinkin argues that the classical dichotomy between real and monetary sectors is invalid. When the money supply changes, it affects relative prices through the real balance effect. Specifically:
1) If money supply increases, prices rise proportionally. This reduces the real value of cash balances and lowers demand for goods, putting downward pressure on prices.
2) The real balance effect restores equilibrium by linking demand for goods and money - if prices fall, real balances and demand for goods rise, putting upward pressure back on prices.
3) Therefore, changes in the money supply can change the price level without affecting relative prices, reconciling monetary and real factors and invalidating the dichotomy between the two.
Concept and application of cd and ces production function in resource managem...Nar B Chhetri
The document defines production functions and describes the Cobb-Douglas and CES production functions. It provides the mathematical forms and properties of each. The Cobb-Douglas production function relates output to labor and capital inputs. It is widely used in empirical analyses. The CES production function generalizes the Cobb-Douglas by allowing the elasticity of substitution to vary. Both functions exhibit constant returns to scale under certain parameter values. Examples are given of estimating production functions for various industries and crops using regression analysis.
The Harrod-Domar model of economic growth extends Keynesian analysis to the long run by considering the dual effects of investment on aggregate demand and productive capacity. It seeks to determine the unique growth rate of investment and income needed to maintain full employment. The Domar version presents a fundamental growth equation showing that the increase in national income depends on the increase in capital stock multiplied by the marginal output-capital ratio. Harrod's model treats growth more dynamically, with the warranted growth rate determined by the population growth rate, output per capita based on investment level, and capital accumulation. Equilibrium is achieved when the actual incremental capital-output ratio equals the required ratio warranted by technology.
Permanent income hypothesis states that consumption is based on permanent income rather than current income. Permanent income refers to income that is expected to persist in the future, while transitory income does not persist. According to the hypothesis, people smooth consumption in response to transitory income variations by using savings and borrowing. The hypothesis assumes tastes and interest rates remain stable over time. In the short run, the consumption function shows consumption is less proportional to income than in the long run, where proportionality is achieved through savings adjustments. Critics argue the hypothesis ignores differences in preferences between rich and poor and does not account for effects of windfalls on consumption.
Capital formation and economic developmentridailyas3
Capital formation involves increasing a nation's physical stock of capital through investments that boost future output and income. These investments include factories, machinery, equipment, materials, as well as social and economic infrastructure like roads, electricity, and communications. Capital accumulation is important for economic development as it allows for expanded output levels and increased efficiency. A higher rate of capital formation leads to higher national income, more employment opportunities, improved infrastructure, a more favorable balance of payments, reduced foreign debt burden, less inflationary pressure, expanded markets, and technological improvements. It is thus seen as crucial for addressing issues like low per capita income, population growth, and shortages in developing countries.
Monetarism is an economic school of thought that stresses the primary importance of the money supply in determining nominal GDP and price levels. It challenges Keynesian economics by arguing that monetary policy, not fiscal policy, should be used to stabilize the economy. Monetarists believe the central bank should target money supply growth and follow fixed rules, rather than have discretion, as monetary factors are more important than fiscal interventions in impacting economic outcomes.
This document discusses offer curves and how they can be used to analyze international trade. It contains the following key points:
1) An offer curve graphically represents the quantities of one good a country is willing to export in exchange for imports of another good at different price ratios, or terms of trade.
2) The derivation of a country's offer curve involves plotting its domestic cost line and determining the export-import combinations it can trade at different terms of trade.
3) The intersection of two countries' offer curves determines the terms of trade and trade quantities that will result from free trade between them. Shifts in the curves can also change the trade outcomes.
4) Gains from trade exist when
Patinkin argues that the classical dichotomy between real and monetary sectors is invalid. When the money supply changes, it affects relative prices through the real balance effect. Specifically:
1) If money supply increases, prices rise proportionally. This reduces the real value of cash balances and lowers demand for goods, putting downward pressure on prices.
2) The real balance effect restores equilibrium by linking demand for goods and money - if prices fall, real balances and demand for goods rise, putting upward pressure back on prices.
3) Therefore, changes in the money supply can change the price level without affecting relative prices, reconciling monetary and real factors and invalidating the dichotomy between the two.
Concept and application of cd and ces production function in resource managem...Nar B Chhetri
The document defines production functions and describes the Cobb-Douglas and CES production functions. It provides the mathematical forms and properties of each. The Cobb-Douglas production function relates output to labor and capital inputs. It is widely used in empirical analyses. The CES production function generalizes the Cobb-Douglas by allowing the elasticity of substitution to vary. Both functions exhibit constant returns to scale under certain parameter values. Examples are given of estimating production functions for various industries and crops using regression analysis.
The Harrod-Domar model of economic growth extends Keynesian analysis to the long run by considering the dual effects of investment on aggregate demand and productive capacity. It seeks to determine the unique growth rate of investment and income needed to maintain full employment. The Domar version presents a fundamental growth equation showing that the increase in national income depends on the increase in capital stock multiplied by the marginal output-capital ratio. Harrod's model treats growth more dynamically, with the warranted growth rate determined by the population growth rate, output per capita based on investment level, and capital accumulation. Equilibrium is achieved when the actual incremental capital-output ratio equals the required ratio warranted by technology.
Permanent income hypothesis states that consumption is based on permanent income rather than current income. Permanent income refers to income that is expected to persist in the future, while transitory income does not persist. According to the hypothesis, people smooth consumption in response to transitory income variations by using savings and borrowing. The hypothesis assumes tastes and interest rates remain stable over time. In the short run, the consumption function shows consumption is less proportional to income than in the long run, where proportionality is achieved through savings adjustments. Critics argue the hypothesis ignores differences in preferences between rich and poor and does not account for effects of windfalls on consumption.
Capital formation and economic developmentridailyas3
Capital formation involves increasing a nation's physical stock of capital through investments that boost future output and income. These investments include factories, machinery, equipment, materials, as well as social and economic infrastructure like roads, electricity, and communications. Capital accumulation is important for economic development as it allows for expanded output levels and increased efficiency. A higher rate of capital formation leads to higher national income, more employment opportunities, improved infrastructure, a more favorable balance of payments, reduced foreign debt burden, less inflationary pressure, expanded markets, and technological improvements. It is thus seen as crucial for addressing issues like low per capita income, population growth, and shortages in developing countries.
The document summarizes the Ramsey-Cass-Koopmans model of economic growth. It describes the key assumptions of the model including representative consumers who maximize utility subject to a budget constraint. The model endogenizes savings by allowing for intertemporal consumer optimization. It presents the optimal growth conditions including the Euler equation and transitional dynamics towards a steady state equilibrium with constant capital-labor ratio and consumption.
The Harrod-Domar growth model uses 3 key variables to determine the growth rate:
1. The saving rate, which determines how much can be invested.
2. Capital productivity, or how much output increases with each unit of new capital.
3. The depreciation rate, which accounts for aging of the existing capital stock.
The model's formula is: Growth Rate = Saving Rate x Capital Productivity - Depreciation Rate. It provides a simple framework for analyzing how changes to these variables impact long-term economic growth.
The document discusses two theories of consumption:
1. Permanent Income Hypothesis by Milton Friedman which argues that consumers base their consumption on their permanent income rather than temporary fluctuations in income. Consumption remains constant even if temporary income changes in the short run.
2. Life Cycle Hypothesis by Modigliani which proposes that long-term consumption is related to lifetime average income and depends on factors like wealth, future earnings, age, and rate of return on capital. It suggests consumption and savings patterns vary at different stages of life and are influenced by the age distribution of the population.
Tobin criticized Keynes' assumption that individuals only hold assets as bonds or cash. Instead, Tobin proposed that individuals hold a portfolio of various assets to strike a balance between risk and return. These portfolios include money, bonds, property, and other assets. According to Tobin, individuals prefer less risk and are uncertain about future interest rates. They therefore choose a combination of less risky but less productive safe assets and more risky but more productive assets. Tobin also showed that an individual's demand for money is inversely related to the interest rate, as higher rates make money less attractive compared to bonds.
Friedman developed a theory of demand for money that asserts it is a function of total wealth, the division of wealth between human and non-human forms, rates of return on various assets, and other influences on tastes and preferences. His demand for money function includes variables like income, asset prices, and interest rates. Empirical studies found the demand for money is stable and more related to permanent income than current income. For underdeveloped countries, demand may be interest-inelastic and influenced more by expected price changes than interest rates due to financial and economic dualism.
Keynes’s psychological law of consumptionAjay Samyal
1) Keynes proposed a psychological law of consumption which states that as income increases, consumption increases but not proportionately. The marginal propensity to consume is less than one.
2) Consumption depends mainly on current income. As income rises, the proportion of income spent on consumption (average propensity to consume) falls.
3) Keynes' consumption function can be expressed as C = a + bYd, where C is consumption, Yd is disposable income, a is autonomous consumption, and b is the marginal propensity to consume (MPC), which is less than the average propensity to consume (APC).
This document discusses endogenous and exogenous growth theories. Endogenous growth theory views technological progress as endogenous to the economic system and driven by factors like investment in human capital and ideas. Exogenous growth theory sees technology as an external factor determined outside the economic system. The Harrod and Domar models emphasize the role of capital accumulation in driving growth, and define actual, warranted, and natural growth rates. Steady growth requires the actual and warranted rates to be equal, and the natural rate puts an upper limit on growth. Disequilibriums can cause inflation or overproduction.
The document summarizes key aspects of the Solow growth model. It explains that the Solow model replaced the fixed production function of the Harrod-Domar model with a neoclassical production function allowing for factor substitution. It presents the basic equations of the Solow model showing that changes in capital per worker are determined by savings, population growth, and depreciation. It illustrates the Solow diagram and how steady state equilibrium is reached. It analyzes how changes in the saving rate and population growth rate impact the model.
Don Patinkin criticized the neoclassical assumptions of homogeneity and dichotomization. He proposed the real balance effect to reconcile goods and money markets. The real balance effect posits that changes in the price level affect real purchasing power, which impacts demand for goods. When prices rise, real balances and goods demand fall, pushing prices back down. This feedback loop between prices, real balances, and goods demand is represented using the IS-LM model, where a fall in prices shifts the LM curve right, raising output and employment until full employment is reached. Patinkin argues this real balance effect denies the homogeneity assumption and integrates goods and money markets.
The Marshall-Lerner approach states that devaluation of a currency will improve the balance of payments if the sum of the price elasticities of demand for exports and imports is greater than one. Devaluation makes a country's exports cheaper and imports more expensive, which can increase exports and decrease imports to reduce a current account deficit. However, its effects are only seen in the long-run as consumers and producers adjust, and the approach makes simplifying assumptions and ignores factors like domestic inflation and income distribution effects.
The Bergson social welfare function was introduced to provide a scientifically normative study of welfare economics. It defines social welfare as a function of the welfare of each member of the community, depending on factors like their consumption and services. The function establishes a relation between social welfare (W) and the utility levels (U) of each individual (U1, U2, etc.), representing social welfare as an increasing function of individual utilities. It assumes social welfare depends on individual wealth/income and distribution of welfare, and allows for interpersonal comparisons of utility. However, the concept has been criticized for not applying to all governments, being difficult to construct, arbitrary, and not empirically significant or helpful for solving problems.
1. The document discusses endogenous growth models and their representation of economic growth processes.
2. It addresses issues with decreasing marginal returns in endogenous growth models and introduces the Jones critique of these models.
3. Semi-endogenous growth models and the Jones model are presented as alternatives that account for decreasing marginal returns to R&D over time.
1. The document discusses the IS-LM model and how it can be used to analyze the effects of fiscal and monetary policy. It presents the IS and LM curves and how they represent equilibrium in the goods and money markets.
2. Fiscal policy like increases in government spending can shift the IS curve right, raising output and interest rates. Monetary policy like increases in the money supply can shift the LM curve down, lowering interest rates and raising output.
3. Shocks to aggregate demand are analyzed using the IS-LM model, and the model can also show the transition from short-run to long-run equilibrium when prices adjust over time.
This chapter discusses the relationship between money, inflation, and prices according to the quantity theory of money. It introduces key concepts such as the money supply, monetary policy, the quantity equation, velocity of money, and how the money supply and inflation are connected. The quantity theory predicts a direct relationship between the growth of the money supply and the inflation rate in the long run.
This document discusses heteroscedasticity, which occurs when the error variance is not constant. It provides examples of when the variance of errors may change, such as with income level or outliers. Graphical methods are presented for detecting heteroscedasticity by examining patterns in residual plots. Formal tests are also described, including the Park test which regresses the log of the squared residuals on explanatory variables, and the Glejser test which regresses the absolute value of residuals on variables related to the error variance. Detection of heteroscedasticity is important as it violates assumptions of the classical linear regression model.
The document outlines the Heckscher-Ohlin model of international trade. The model assumes two countries, two goods, and two factors of production (labor and land). It is assumed that each country has a relative abundance in one of the two factors. The labor-abundant country will export and specialize in the good that uses its abundant factor intensively. Free trade equalizes factor prices between the countries and benefits the owners of each country's abundant factor through increased productivity.
Ramsey–Cass–Koopmans model and its application in EthiopiaMolla Derbe
Many economists have argued on macroeconomics words for several years in their school of
thoughts. Ramsey, the neoclassical economist, has not believed in the Solow model with some
terms. What makes his model differs from the Solow model is that it explicitly models the choice
of consumption at a point in time and so has made the savings rate endogenous. The Twentieth
first research in Ethiopia (Seid Nuru, 2012, p.6-7) found that the outcome of the optimization of
the dynamic model is that growth in the long-run depends on the rate of technological change
and rate of change of rainfall variability in terms of both amplitude and frequency.
Ramsey–Cass–Koopmans model and its application in EthiopiaMolla Derbe
Many economists have argued on macroeconomics words for several years in their school of
thoughts. Ramsey, the neoclassical economist, has not believed in the Solow model with some
terms. What makes his model differs from the Solow model is that it explicitly models the choice
of consumption at a point in time and so has made the savings rate endogenous. The Twentieth
first research in Ethiopia (Seid Nuru, 2012, p.6-7) found that the outcome of the optimization of
the dynamic model is that growth in the long-run depends on the rate of technological change
and rate of change of rainfall variability in terms of both amplitude and frequency.
The document summarizes the Ramsey-Cass-Koopmans model of economic growth. It describes the key assumptions of the model including representative consumers who maximize utility subject to a budget constraint. The model endogenizes savings by allowing for intertemporal consumer optimization. It presents the optimal growth conditions including the Euler equation and transitional dynamics towards a steady state equilibrium with constant capital-labor ratio and consumption.
The Harrod-Domar growth model uses 3 key variables to determine the growth rate:
1. The saving rate, which determines how much can be invested.
2. Capital productivity, or how much output increases with each unit of new capital.
3. The depreciation rate, which accounts for aging of the existing capital stock.
The model's formula is: Growth Rate = Saving Rate x Capital Productivity - Depreciation Rate. It provides a simple framework for analyzing how changes to these variables impact long-term economic growth.
The document discusses two theories of consumption:
1. Permanent Income Hypothesis by Milton Friedman which argues that consumers base their consumption on their permanent income rather than temporary fluctuations in income. Consumption remains constant even if temporary income changes in the short run.
2. Life Cycle Hypothesis by Modigliani which proposes that long-term consumption is related to lifetime average income and depends on factors like wealth, future earnings, age, and rate of return on capital. It suggests consumption and savings patterns vary at different stages of life and are influenced by the age distribution of the population.
Tobin criticized Keynes' assumption that individuals only hold assets as bonds or cash. Instead, Tobin proposed that individuals hold a portfolio of various assets to strike a balance between risk and return. These portfolios include money, bonds, property, and other assets. According to Tobin, individuals prefer less risk and are uncertain about future interest rates. They therefore choose a combination of less risky but less productive safe assets and more risky but more productive assets. Tobin also showed that an individual's demand for money is inversely related to the interest rate, as higher rates make money less attractive compared to bonds.
Friedman developed a theory of demand for money that asserts it is a function of total wealth, the division of wealth between human and non-human forms, rates of return on various assets, and other influences on tastes and preferences. His demand for money function includes variables like income, asset prices, and interest rates. Empirical studies found the demand for money is stable and more related to permanent income than current income. For underdeveloped countries, demand may be interest-inelastic and influenced more by expected price changes than interest rates due to financial and economic dualism.
Keynes’s psychological law of consumptionAjay Samyal
1) Keynes proposed a psychological law of consumption which states that as income increases, consumption increases but not proportionately. The marginal propensity to consume is less than one.
2) Consumption depends mainly on current income. As income rises, the proportion of income spent on consumption (average propensity to consume) falls.
3) Keynes' consumption function can be expressed as C = a + bYd, where C is consumption, Yd is disposable income, a is autonomous consumption, and b is the marginal propensity to consume (MPC), which is less than the average propensity to consume (APC).
This document discusses endogenous and exogenous growth theories. Endogenous growth theory views technological progress as endogenous to the economic system and driven by factors like investment in human capital and ideas. Exogenous growth theory sees technology as an external factor determined outside the economic system. The Harrod and Domar models emphasize the role of capital accumulation in driving growth, and define actual, warranted, and natural growth rates. Steady growth requires the actual and warranted rates to be equal, and the natural rate puts an upper limit on growth. Disequilibriums can cause inflation or overproduction.
The document summarizes key aspects of the Solow growth model. It explains that the Solow model replaced the fixed production function of the Harrod-Domar model with a neoclassical production function allowing for factor substitution. It presents the basic equations of the Solow model showing that changes in capital per worker are determined by savings, population growth, and depreciation. It illustrates the Solow diagram and how steady state equilibrium is reached. It analyzes how changes in the saving rate and population growth rate impact the model.
Don Patinkin criticized the neoclassical assumptions of homogeneity and dichotomization. He proposed the real balance effect to reconcile goods and money markets. The real balance effect posits that changes in the price level affect real purchasing power, which impacts demand for goods. When prices rise, real balances and goods demand fall, pushing prices back down. This feedback loop between prices, real balances, and goods demand is represented using the IS-LM model, where a fall in prices shifts the LM curve right, raising output and employment until full employment is reached. Patinkin argues this real balance effect denies the homogeneity assumption and integrates goods and money markets.
The Marshall-Lerner approach states that devaluation of a currency will improve the balance of payments if the sum of the price elasticities of demand for exports and imports is greater than one. Devaluation makes a country's exports cheaper and imports more expensive, which can increase exports and decrease imports to reduce a current account deficit. However, its effects are only seen in the long-run as consumers and producers adjust, and the approach makes simplifying assumptions and ignores factors like domestic inflation and income distribution effects.
The Bergson social welfare function was introduced to provide a scientifically normative study of welfare economics. It defines social welfare as a function of the welfare of each member of the community, depending on factors like their consumption and services. The function establishes a relation between social welfare (W) and the utility levels (U) of each individual (U1, U2, etc.), representing social welfare as an increasing function of individual utilities. It assumes social welfare depends on individual wealth/income and distribution of welfare, and allows for interpersonal comparisons of utility. However, the concept has been criticized for not applying to all governments, being difficult to construct, arbitrary, and not empirically significant or helpful for solving problems.
1. The document discusses endogenous growth models and their representation of economic growth processes.
2. It addresses issues with decreasing marginal returns in endogenous growth models and introduces the Jones critique of these models.
3. Semi-endogenous growth models and the Jones model are presented as alternatives that account for decreasing marginal returns to R&D over time.
1. The document discusses the IS-LM model and how it can be used to analyze the effects of fiscal and monetary policy. It presents the IS and LM curves and how they represent equilibrium in the goods and money markets.
2. Fiscal policy like increases in government spending can shift the IS curve right, raising output and interest rates. Monetary policy like increases in the money supply can shift the LM curve down, lowering interest rates and raising output.
3. Shocks to aggregate demand are analyzed using the IS-LM model, and the model can also show the transition from short-run to long-run equilibrium when prices adjust over time.
This chapter discusses the relationship between money, inflation, and prices according to the quantity theory of money. It introduces key concepts such as the money supply, monetary policy, the quantity equation, velocity of money, and how the money supply and inflation are connected. The quantity theory predicts a direct relationship between the growth of the money supply and the inflation rate in the long run.
This document discusses heteroscedasticity, which occurs when the error variance is not constant. It provides examples of when the variance of errors may change, such as with income level or outliers. Graphical methods are presented for detecting heteroscedasticity by examining patterns in residual plots. Formal tests are also described, including the Park test which regresses the log of the squared residuals on explanatory variables, and the Glejser test which regresses the absolute value of residuals on variables related to the error variance. Detection of heteroscedasticity is important as it violates assumptions of the classical linear regression model.
The document outlines the Heckscher-Ohlin model of international trade. The model assumes two countries, two goods, and two factors of production (labor and land). It is assumed that each country has a relative abundance in one of the two factors. The labor-abundant country will export and specialize in the good that uses its abundant factor intensively. Free trade equalizes factor prices between the countries and benefits the owners of each country's abundant factor through increased productivity.
Ramsey–Cass–Koopmans model and its application in EthiopiaMolla Derbe
Many economists have argued on macroeconomics words for several years in their school of
thoughts. Ramsey, the neoclassical economist, has not believed in the Solow model with some
terms. What makes his model differs from the Solow model is that it explicitly models the choice
of consumption at a point in time and so has made the savings rate endogenous. The Twentieth
first research in Ethiopia (Seid Nuru, 2012, p.6-7) found that the outcome of the optimization of
the dynamic model is that growth in the long-run depends on the rate of technological change
and rate of change of rainfall variability in terms of both amplitude and frequency.
Ramsey–Cass–Koopmans model and its application in EthiopiaMolla Derbe
Many economists have argued on macroeconomics words for several years in their school of
thoughts. Ramsey, the neoclassical economist, has not believed in the Solow model with some
terms. What makes his model differs from the Solow model is that it explicitly models the choice
of consumption at a point in time and so has made the savings rate endogenous. The Twentieth
first research in Ethiopia (Seid Nuru, 2012, p.6-7) found that the outcome of the optimization of
the dynamic model is that growth in the long-run depends on the rate of technological change
and rate of change of rainfall variability in terms of both amplitude and frequency.
This document provides an introduction to managerial economics. It defines managerial economics and discusses its scope and relationship to other disciplines. Basic economic concepts for decision making like opportunity cost, incremental principle, and discounting principle are covered. The roles and responsibilities of managerial economists in business are described, including assisting with planning, analysis, and advising management. The document also discusses economic objectives of firms, scarcity of resources, efficiency, and the role of government in economic development through fiscal and monetary policy.
FORMATION OF THE CAPM PORTFOLIO MODEL, THE CENTRAL CONCEPT OF THE MODERN FINA...IAEME Publication
An attempt to study the role of the market for corporate securities and form an optimal portfolio is made in the article. Issues of the feasibility of investing in certain projects, buying stakes in companies, financing enterprises from various sectors of the economy and countries are solved based on the ratio of risk and profitability. As such, financiers needed a universal model to help them make important decisions. The CAPM is a model for evaluating financial assets, a central concept of the modern financial economy. This model provides an idea of what should be the ratio between the risk of investing in an asset and the profitability of a given investment. The investment portfolio is formed using various models. The article provides an analysis of the models of forming securities portfolio. These models are diverse, but the authors prefer to opt for the most common model for managing the CAPM market portfolio as it is considered more accurate. The article considers the evolution of CAPM models taking the asymmetry of the risk effect into account.
Principles of Economics 5th Edition Gans Solutions ManualGordonlANA
This chapter introduces key economic concepts and models used to think like an economist. It discusses how economists use scientific methods and assumptions to build simplified models that provide insight into real-world phenomena. The circular flow diagram and production possibilities frontier are presented as introductory models. Microeconomics focuses on individual decision-making of households and firms, while macroeconomics analyzes economy-wide forces. Positive statements describe the world as it is, while normative statements make claims about how the world should be. Economists may offer conflicting policy advice due to differences in scientific judgments or values.
Application of Linear Programming for Optimal Use of Raw Materials in Bakeryinventionjournals
This document summarizes a study that utilized linear programming to optimize the use of raw materials in a bakery for profit maximization. The researchers formulated a linear programming model to determine the optimal production levels of small, big, and giant loaves. The results showed that producing 962 units of small loaf and 38 units of big loaf, while producing 0 units of giant loaf, would yield the highest profit of N20,385. In conclusion, more production of small and big loaves would maximize the bakery's profit.
Application of Linear Programming for Optimal Use of Raw Materials in Bakeryinventionjournals
This work utilized the concept of Simplex algorithm; an aspect of linear programing to allocate raw materials to competing variables (big loaf, giant loaf and small loaf) in bakery for the purpose of profit maximization. The analysis was carried out and the result showed that 962 units of small loaf, 38 units of big loaf and 0 unit of giant loaf should be produced respectively in order to make a profit of N20385. From the analysis, it was observed that small loaf, followed by big loaf contribute objectively to the profit. Hence, more of small loafs and big loafs are needed to be produced and sold in order to maximize the profit.
This document provides an introduction to business economics. It defines business economics as the integration of economic theory with business practice to facilitate decision making. The key points covered include:
- Business economics applies economic theory and methodology to solve business problems and make optimal decisions.
- It is microeconomic in nature and focuses on firms. It is normative, pragmatic, and prescriptive to help management make correct decisions and plan for the future.
- The scope of business economics includes demand analysis, cost analysis, production, pricing, profit and capital management.
- A business economist studies macroeconomic factors and links them to firms, assists in planning, performs cost-benefit analyses, and conducts research and statistical analysis
Genuine%20 %2001%20-%20 introduction%20to%20macroeconomicsDaniseck Adam
This document provides an introduction to macroeconomics, including:
- Defining economics as the study of choice under scarcity and the results of those choices.
- Explaining the three core economic questions of what, how, and for whom to produce goods and services.
- Outlining 10 key economic principles such as people facing tradeoffs, rational decision-making at the margin, and markets being a generally good way to organize economic activity.
- Distinguishing between microeconomics which studies individual agents, and macroeconomics which studies overall economy performance.
This document provides an introduction to managerial economics. It defines economics as the study of human economic activity and wealth. It discusses microeconomics as the study of individual consumers and firms, and macroeconomics as the study of aggregate economic activity in a country. Managerial economics bridges traditional economics theory and real business practices by providing tools to help managers make competent decisions. It operates within the constraints of macroeconomic conditions and suggests prescriptive actions to optimally solve problems given a firm's objectives. The scope of managerial economics includes decisions around product selection, production methods, pricing, promotion, and location from an operational and environmental perspective.
This report discusses and talks about the engineering economic analysis material and
introduces the student to cost analysis scenarios in which a typical working engineer
might be involved. It outlines some of the many and varied cost and economic
analyses to which beginning, as well as journeyman, engineers are exposed. Effective
analysis of product and project costs and the ability to implement cost control
measures are two sides of the same coin. Most business economic decisions involve
the element of time, however, and it is thus necessary to consider factors such as
interest, the time value of money, and depreciation of equipment. The effect of
inflation (or deflation) on the rate of return for investment depends on how the
future returns respond. Larger investments are analyzed by evaluating the rate of
return. Like other decision-making processes, the decision matrix is a valuable tool to
assist in evaluating the various alternatives, And so report explained and I mentioned
a very important part or let's say element in engineering economic witch is interested I
explained it briefly within its formula and figures and its type and ect...finally my aim
is showing effect and importance and actions of the (Interest) in economy field.
Business Economics unit-1 Osmania University IMBA Balasri Kamarapu
Managerial economics is the application of economic theory and methodology to managerial decision making. It helps managers make optimal decisions about allocating scarce resources. Some key concepts in managerial economics include opportunity cost, incremental cost, time perspective, discounting, and the equi-marginal principle. Opportunity cost refers to the next best alternative forgone in making a decision. Incremental cost is the additional cost of producing one more unit. Managers must consider both short-run and long-run time perspectives. Discounting accounts for the time value of money by calculating present values. The equi-marginal principle suggests allocating resources to equalize marginal productivity gains across activities.
This document discusses approaches to calculating the international cost of capital. It notes that while the capital asset pricing model (CAPM) is commonly used, it provides biased estimates in emerging markets due to unique country risks. The document evaluates 12 different models and recommends using a company's domestic cost of capital plus a country risk premium in basis points estimated through quantitative crisis signal and country rating models. It stresses the country premium should account for cyclical, exchange rate, solvency, political and business environment risks over various time horizons.
This document provides a five-step guide for companies to transition to a circular economy model. It begins with an executive summary that outlines the benefits of a circular economy, including generating $1.8 trillion for the European economy by 2030 and reducing greenhouse gas emissions. The guide then describes each of the five steps: 1) assess the company's current circular practices, 2) integrate circular design principles, 3) build business cases, 4) ensure stakeholder support, and 5) lead by example. The overall objective is to help companies unlock more value while using fewer resources.
Epgp sm1 assignment 12 may 10_ rajendra inani #27Rajendra Inani
This document contains 5 sections that discuss various topics:
1. Evaluating investment opportunities in emerging markets such as Argentina, highlighting the importance of sensitivity analysis and understanding the factors considered in different models.
2. Three situations faced by product managers at Yahoo regarding organizational design challenges.
3. How IBM has used dynamic capabilities to successfully transform and leverage intellectual capital across diverse businesses.
4. How Thailand's Siam Cement Group addresses corporate social responsibility and fairness rooted in Thai culture.
5. Danone's knowledge management approach of informal knowledge sharing networks and Mougin's options to take it further.
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ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
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Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Natural birth techniques - Mrs.Akanksha Trivedi Rama University
Presentation
1. Ramsey–Cass–Koopmans model
and its application in Ethiopia
By
Molla Deribie
ID.No.MAEC/0182/2005
Department: Agricultural Economics
St.Mary’s University College
School of Graduate Studies
Jan 2012,Addis Ababa
1
3. 1.Definition of Ramsey–Cass–
Koopmans growth model
It is a neo-classical model of economic
growth
It explicitly models the choice of
consumption at a point in time.
It has made the savings rate
endogenous.
3
4. 2.Objectives of the paper
To understand what the Ramsey –
Cass–Koopmans growth model says
about;
To see application of the model in
Ethiopia and
To draw a relevant conclusion on
wards the results and scientific findings
of the model.
4
7. Problem of the representative households:
• L= u (c)e-(ρ-n)t
+λ[ wt+(r-n)bt-ct] ,where λ is
Lagrangian multiplier or marginal utility
of income.
FOC
7
8. Transversality condition:
The value of the representative
household’s assets must approach zero
as time approaches infinity.
The higher r, the more willing
households are to save and shift
consumption in the future.
The higher the rate of return to
consumption is, the more willing
households are to sacrifice future
consumption for more current
consumption and thereby less current
saving.
8
9. Firms
Problem of the representative firm i:
choose the amount of capital Κi and
labor input Li to maximize its profit πi
πi = F(Ki , Li ) − (r +δ )Ki – wLi
FOC
9
10. Cont..
The marginal product of each input
equals its associated cost. This is an
optimal point of profit maximization.
To maximize profit, the firm hires up
to the point at which the marginal
product of each input equals its
associated cost.
All firms and factor owners being paid
their marginal product
10
11. 4.Application of Ramsey –Cass
Koopmans growth model in
Ethiopia
1.On Risk modeling:
2.On Hydropower and Irrigation Modeling:
11
12. Risk modeling:
This model can identify the aggregate
effect of risk on resource accumulation,
economic growth and savings and the
nature of the risk faced on the rural
peoples of Ethiopia.
Agents maximize expected utility over an
infinite horizon. Each household solves
for the optimal investment function.
12
14. Hydropower and Irrigation Modeling:
Empirical evidence from the International
Food Policy Research Institute (IFPRI)
The objective is to evaluate if Ethiopia’s
economy is better off with or without the
implementation of the hydropower project.
This model is applied on energy
development, identification of suitable
hydropower and irrigation projects,
assessing hydropower and irrigation
optimization.
14
15. Cont..
The basic premise of the model is to
balance capital, labor, and the energy
sector (collectively constituting gross
domestic product) with consumption
and investment
15
16. A* Lt
α
*Kt
β
*Et
γ
+ ETt = ct + it + IEt
• A is a calibration
• E the consumed energy in
domestic=4,643 GWh
• ET is energy trade
• L=37.5 million
• K=US$ 16.5 billion
• α, β, and γ are set to 0.446, 0.48, and
0.074, respectively.
• IE energy investment 16
17. Objective function
A multiplier greater than 1.0 indicates
economic growth if the project is
realized.
less than 1.0 implies that the project
may not be economically wise.
17
18. 5.Conclusion
In general the Ramsey–Cass–Koopmans
model is applicable on economic
optimization problems in Ethiopia.
It is also valid on utility and profit
maximization problems and project
worthiness.
18