This document is a summary of all key graphs needed for a first year microeconomics course. Each graph comes with labels, descriptions, analysis and when needed, evaluations.
, we need to
0
know relative labour
prices of $ capital a
↳ o t
¥
can plop on isocos, line
,
whichever puny ,
falls on lowest isocosr is most effective 5
e m
,
e-
g- if wages become
relatively more N ••B
expensive than fire will coal then 1600s
, ••E
-
Hoos
adopt capital intensive tech (A) to .
I 4 S 6 7 8 9
CUT costs (shown by isocosr in 1700s 2 3 10
changing )
number of workers
Modelling Malthus .
LHS ; lower pop higher wage because
average product of Labo
§
=
§
.
land vice versa,
o
is
higher
3
RHS
§ : slopes upwards because when
•É wages high pop growth
are
so
, , . is p
pop wie rise
so
.
Explains Malthusian Trap
"
B- B
wage -
→
- - - - - - - - - - - - - - - -
.
°
If economy at B (
high wages then pop wie rise (growth ar
- - - - -
(High)
'
I ,
.
B
As
pop rises the
economy moves down the line in the left
☐
.
,
i s
A 'o diagram until it reaches A
wage t -
ga - - -
- - - - - - - - - - - - - -
At A the
economy has returned to subsistence wages
- - -
- -
°
'
Now) , ,
↳
,
living standards do nor rise
1 I
+
Pop how P°Pµigh
-
population
population growth
and subsistence wage)
Economy begins at A (mid pop
Modelling change in productivity
• .
d labour = higher wage to
§ .
New technology raises average product of
⑨
.
8
any given population
level real wage line shifts up (economy at D)
3 3
(D )
'
8 § • At D ,
higher wages leads to population growth
Labour
wage faces average product of
-0 • As
pop . rises , due to
diminishing C
down the real wage curve until it reaches
☐
Economy moves
(C )
'
remains constant
"
• At C , wage is subsistence level again , pop .
wage
(High)
- - - -
D- - - - - - - - - - - - - - - - - - - - -
? :O technological change only
raises pop ,
,
not real wages or
living standards
wage i.c- '
A- o
- - -
-
This model
- - - - '
↳
-
- -
flow) c
- - - - -
I I was accurate until
'
around 1800,
population $
1
, when
I 1
real
popmed Pip population
- + wages began to
simultaneously
.
nigh increase
population growth
Escape
' '
=
revolution
> permanent technological .
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