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By Sharon R. Berry

Born out of a long time of lecture room event, this worthwhile source presents lecturers with a wide selection of useful school room administration and self-discipline techniques.

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The second task required by the firm in order to minimize their costs is to choose a capital-labor ratio such that the marginal product per dollar spent on each input is the same. That is, the firm's cost-minimizing input combination is one such that MPlIPl = MPkIPk. Rearranging, we have MPJIMPk = PliPk. This latter expression is shown in figure 3 at point A. The tangency of the isoquant (Q1) and the isocost curve (Rl)-the point at which the slopes are equal to each other-is thus the cost-minimizing input combination for Ql.

Those who have been granted this monopoly status and those who covet it both understand that political decisions are not etched in stone. Hence both of these groups are motivated to allocate resources in an attempt to either maintain or receive the government's favor. The political process thus generates rent-seeking behavior. Resources allocated in this fashion do not produce goods or services with market value. Rather they are used to create a favorable (from the spender's point of view) distribution of wealth.

34 X-EFFICIENCY: THEORY, EVIDENCE AND APPLICATIONS does exist, does not result in any net change in total welfare. In other words, even if it exists it is assumed not to be of any consequence. A. 2. 3. Posner (1975) on Rent-Seeking as a Competitive Activity Assuming that obtaining a monopoly is a competitive activity, and assuming rational behavior, Posner (then correctly) assumes that at the margin the costs of obtaining a monopoly is equal to the expected profits of being a monopolist; the standard maximization assumption.

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