Micro Handout 13: Short and Long Run Applications
|
|
- Morris Crawford
- 5 years ago
- Views:
Transcription
1 Amherst College epartment of Economics Economics 111 ection 5 Fall 2015 Micro Handout 13: hort and Long Run Applications Euilibrium The euilibrium price and uantity are determined by the market demand and market supply curves. upply Curve The market supply curve is the horizontal sum of each individual firm s supply curve. Individual Firm s upply Curve: An individual firm s supply curve is its marginal cost curve, as long as the price exceeds average variable cost. * rofit Maximization: MR = Marginal Revenue (MR): Change in the firm s total revenue resulting from a one unit change in the uantity of output produced. Marginal Cost (): Change in the firm s total cost resulting in a one unit change in the uantity of output produced. When profits are maximized, marginal revenue euals marginal cost: MR > MR = MR < More production rofit is Less production increases profit maximized increases profit Marginal Revenue and erfect Competition: MR = In a perfectly competitive industry a firm s marginal revenue euals the price. A firm s marginal revenue curve is horizontal intersecting the vertical axis at the price. Marginal Cost Curve: Upward loping The marginal cost curve is upward sloping. Individual Firm s upply Curve: An individual firm s supply curve is its marginal cost curve with one caveat, as long as the price exceeds average variable cost. Rationale for the Caveat and the Long Run Behavior of an Individual Firm uestion: How does the owner of a firm decide to Continue to Operate or Go Out of Business Answer: Compare Owner s with Owner s if when operating he/she goes out of business the firm and works for someone else
2 2 hort Run and Long Run hort Run In the short run, a firm s actions are restricted by commitments which the firm made previously. For example, a firm may have entered into labor agreements, signed legal contracts, signed leases, etc. hort Run hutdown Rule rice () and Average Variable Cost (AVC) < AVC Firm goes out of business in the short run. Firm shuts down. Individual Firm s upply Curve: The individual firm s supply curve is its marginal cost curve until the price is very low and falls below average variable cost when the firm would shut down and produce nothing. Long Run However, commitments do not last forever. Labor agreements, contracts, and leases specify termination dates. The long run refers to the period of time after commitment expires. Long Run Exit Rule rice () and Average Total Cost (ATC) < ATC Firm goes out of business. Firm exits the industry. (Economic) rofit: ince economists include opportunity costs as part of total costs, profits compare the the owner earns when he/she operates the firm with the the owner would earn if he/she goes out of business and works for someone else Individual Firm s upply Curve hutdown: <AVC Curve
3 3 The Long Run and rofit Review: ince (the economist s) total cost includes opportunity costs, profit compares the Jeff would earn if he operates his firm if the if he would earn if he goes out of business. rofit = Total Revenue Total Costs Total Costs = Accounting Costs + Opportunity Costs = Total Revenues (Accounting Costs + Opportunity Costs) = Total Revenues Accounting Costs Opportunity Costs = (Total Revenues Accounting Costs) Opportunity Costs = monthly monthly Review: The sign of profit and hence the long run behavior depends on price () and average total cost (ATC). rofits = Total Revenues Total Costs = TR TC = ATC = ( ATC) TR = Factoring out : ATC = TC ATC = TC Review: rice, Average Total Cost, Exit, Entry, and Long Run Euilibrium Owner s Owner s rofit = when operating if he/she goes out of business = ( ATC) the firm and works for someone else < ATC = ATC > ATC rofit < 0 rofit = 0 rofit > 0 when < when = when > operating if he goes operating if he goes operating if he goes his firm out of business his firm out of business his firm out of business Jeff earns less by operating his firm than by working for someone else. Jeff earns the same by operating his firm or by working for someone else. Jeff is earns more by operating his firm than by working for someone else. Exit occurs Long run euilibrium Entry occurs
4 4 Review: Euilibrium rice, Minimum Average Total Cost, and the Long Run Euilibrium price less than minimum average total cost: < min ATC Max profit: = * ATC Firm s rofit 0 Firms will upply curve rice will * MR, Typical Firm ATC Euilibrium price greater than minimum average total cost: > min ATC Max profit: = * ATC Firm s rofit 0 Firms will upply curve rice will * MR, Typical Firm ATC Euilibrium price eual to minimum average total cost: = min ATC Max profit: = * ATC Firm s rofit 0 Is this a long run euilibrium? Explain. * MR, Typical Firm ATC
5 5 roject: Assess resident Clinton s Level laying Field Analysis of the izza Industry. On April 7, 1994, resident Clinton held a town meeting at the KCTV television studios in Kansas City, Missouri. He fielded a variety of uestions concerning his health care proposal. One uestion was posed by Herman Cain, president and chief executive officer of Godfather izza, Inc. Mr. Cain feared that Clinton s proposal would raise his costs, hurt his business, and force him to lay off workers. resident Clinton agreed that costs would rise, but argued that since the costs of all pizza firms would increase, Godfather would not suffer:..., so [for] you [the health proposal] would add about one and one-half percent to the total cost of doing business. Would that really cause you to lay a lot of people off if all your competitors had to do it too? Only if people stop eating out. If all your competitors had to do it, and your cost of doing business went up one and one-half percent, wouldn't that leave you in the same position you are in now? Why wouldn't they all be in the same position, and why wouldn't you all be able to raise the price of pizza two percent? I'm a satisfied customer. I'd keep buying from you. resident Clinton s Analysis: resident Clinton emphasizes that the costs of all pizza firms will be increased by his health proposal. Conseuently, he contends that the playing field will remain level and no individual firm would not be hurt. o you agree or disagree? izza Typical izza Firm * (millions) (hundreds) Before Implementation of the roposal: etting the tage On the graph above, illustrate the uantity of output that the typical pizza firm will produce. To do so, consider the following: What is the goal of each pizza firm? t. A profit maximizing firm produces the level of output at which =. In a metropolitan area, there are a large number of small, independent pizza firms; conseuently, the pizza market is : In a market, =. Illustrate the firm's profit maximizing level of output.
6 6 Before drawing the average total cost curve on the graph, consider the following: At the present time, the number of pizza firms is more or less constant; occasionally, a new firm will enter and occasionally, a firm will exit; but on the whole, the number of firms is constant. Is the industry is in long run euilibrium? When an industry is in long run euilibrium, the price,, euals. Explain. How is the average total cost curve shaped?. Now draw the average total cost curve on the above diagram After Implementation of the roposal: uppose that the Clinton proposal increases the pizza firms' costs by $.10 per slice. Begin by considering the short run effect. What happens to the typical firm's average total cost curve?. What happens to the typical firm's marginal cost curve?. Where does the market supply curve "come from?". What happens to the market supply curve?. What happens to the euilibrium price?. What happens to the euilibrium uantity?. What happens to the firm's profit maximizing level of output?. How are the price and average total cost related?. Now, consider the long run. Will firms enter or exit?. Explain. On the above graph: What happens to the market supply curve?. Explain. What happens to the euilibrium price?. What happens to the euilibrium uantity?. Bottom Line: What grade would you give resident Clinton for his economic analysis?
Micro Lecture 10: Supply and Profit Maximization
Micro Lecture 10: Supply and Profit Maximization President Clinton s Level Playing Field Health Insurance Argument On April 7, 1994, President Clinton (Hilary s husband) held a town meeting at the KCTV
More informationPerfect Competition CHAPTER 14. Alfred P. Sloan. There s no resting place for an enterprise in a competitive economy. Perfect Competition 14
CHATER 14 erfect Competition There s no resting place for an enterprise in a competitive economy. Alfred. Sloan McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
More informationThursday, October 13: Short and Long Run Equilibria
Amherst College epartment of Economics Economics 54 Fall 2005 Thursday, October 13: Short and Long Run Equilibria Equilibrium in the Short Run The equilibrium price and quantity are determined by the market
More informationFirms in Competitive Markets
1 Basic Economics Chapter 14 Firms in Competitive Markets Competitive markets (1) Market with many buyers and sellers (e.g., ) (2) Trading identical products (e.g., ) (3) Each buyer and seller is a price
More informationLast Name: First Name:
Economics 101 Section 5 Midterm Exam #3 Thursday April 8, 2004 Last Name: First Name: Student #: Instructions: This exam has a total of 4 uestions. There are a total of 60 points on this exam and each
More informationCH 14: Perfect Competition
CH 14: Perfect Competition Characteristics of Perfect Competition 1. Both buyers and sellers are price takers A price taker is a firm (or individual) who takes the price determined by market supply and
More informationMicroeonomics. Firms in Competitive Markets. In this chapter, look for the answers to these questions: Introduction: A Scenario. N.
C H A T E R 14 Firms in Competitive Markets R I N C I L E S O F Microeonomics N. Gregory Mankiw remium oweroint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved
More informationMicro Perfect Competition Essentials 1 WCC
Micro erfect Competition Essentials 1 WCC Industry structure/characteristics affects how demand curves and revenue behave for a firm. erfectly Competitive Industry Characteristics 1) There are a large
More informationIntroduction: A Scenario. Firms in Competitive Markets. In this chapter, look for the answers to these questions:
14 Firms in Competitive Markets R I N C I L E S O F ECONOMICS FOURTH EDITION N. GREGORY MANKIW remium oweroint Slides by Ron Cronovich 2008 update 2008 South-Western, a part of Cengage Learning, all rights
More informationLecture 11. Firms in competitive markets
Lecture 11 Firms in competitive markets By the end of this lecture, you should understand: what characteristics make a market competitive how competitive firms decide how much output to produce how competitive
More information23 Perfect Competition
23 Perfect Competition Learning Objectives After you have studied this chapter, you should be able to 1. define price taker, total revenues, marginal revenue, short-run shutdown price, short-run breakeven
More information2007 Thomson South-Western
WHAT IS A COMPETITIVE MARKET? A competitive market has many buyers and sellers trading identical products so that each buyer and seller is a price taker. Buyers and sellers must accept the price determined
More information8 CHAPTER OUTLINE Costs in the Short Run Fixed Costs
e PART II I The Market System: Choices Made by Households and Firms e CASE FAIR OSTER PEARSON 2012 Pearson Education, Inc. Publishing as Prentice Hall PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I
More informationUnit 6 Perfect Competition and Monopoly - Practice Problems
Unit 6 Perfect Competition and Monopoly - Practice Problems Multiple Choice Identify the choice that best completes the statement or answers the question. 1. One characteristic of a perfectly competitive
More informationEconomics 352: Intermediate Microeconomics. Notes and Sample Questions Chapter Ten: The Partial Equilibrium Competitive Model
Economics 352: Intermediate Microeconomics Notes and Sample uestions Chapter Ten: The artial Euilibrium Competitive Model This chapter will investigate perfect competition in the short run and in the long
More informationFirms in Competitive Markets. UAPP693 Economics in the Public & Nonprofit Sectors Steven W. Peuquet, Ph.D.
Firms in Competitive Markets UAPP693 Economics in the Public & Nonprofit Sectors Steven W. Peuquet, Ph.D. 1 These slides are for use only as part of a formal instructional course and may not be copied,
More informationSome of the assumptions of perfect competition include:
This session focuses on how managers determine the optimal price, quantity and advertising decisions under perfect competition. In earlier sessions we have looked at the nature of competitive markets.
More informationQuiz #5 Week 04/12/2009 to 04/18/2009
Quiz #5 Week 04/12/2009 to 04/18/2009 You have 30 minutes to answer the following 17 multiple choice questions. Record your answers in the bubble sheet. Your grade in this quiz will count for 1% of your
More informationWhat is a Competitive Market?
Firms in Competitive Markets Competitive market (1) Market with many buyers and sellers (e.g., ) (2) Trading identical products (e.g., ) (3) Each buyer and seller is a price taker (no price influence)
More informationFirms in Competitive Markets
14 Firms in Competitive Markets PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 What is a Competitive Market? Competitive market Perfectly competitive market Market with
More informationPractice Exam 3: S201 Walker Fall with answers to MC
Practice Exam 3: S201 Walker Fall 2007 - with answers to MC Print Your Name: I. Multiple Choice (3 points each) 1. If marginal utility is falling then A. total utility must be falling. B. marginal utility
More informationMICROECONOMICS - CLUTCH CH PERFECT COMPETITION.
!! www.clutchprep.com CONCEPT: THE FOUR MARKET MODELS Market structure describes the environment in which a firm operates, determined by the Perfect Competition Monopolistic Competition Oligopoly Monopoly
More informationEcon 98 (CHIU) Midterm 1 Review: Part A Fall 2004
Disclaimer: The review may help you prepare for the exam. The review is not comprehensive and the selected topics may not be representative of the exam. In fact, we do not know what will be on the exam.
More informationACTIVITY 34 Costs and Competitive Market Supply (Perfect Competition)
ACTIVITY 34 Costs and Competitive Market Supply (erfect Competition) art A. One in the Short Run 1. The Fiasco Company is a perfectly competitive firm whose daily costs of production (including a normal
More informationPractice Exam 3: S201 Walker Fall 2004
Practice Exam 3: S201 Walker Fall 2004 I. Multiple Choice (3 points each) 1. Which of the following statements about the short-run is false? A. The marginal product of labor may increase or decrease. B.
More informationChapter 7 Consumer/Producers and Market Efficiency
Midterm #2 Exam Study uestions: (A subset of these questions/concepts will be on the exam) Chapter 5 - Elasticity Define rice elasticity of demand. What does it mean to say demand is highly elastic? What
More informationc) Will the monopolist described in (b) earn positive, negative, or zero economic profits? Explain your answer.
Economics 101 Summer 2015 Answers to Homework #4b Due Tuesday June 16, 2015 Directions: The homework will be collected in a box before the lecture. Please place your name, TA name and section number on
More information4. Which of the following statements about marginal revenue for a perfectly competitive firm is incorrect? A) TR
Name: Date: 1. Which of the following will not be true of a perfectly competitive market? A) Buyers and sellers will have an imperceptible effect on the market. B) Firms can freely enter and exit the market.
More informationLesson 3-2 Profit Maximization
Lesson 3-2 rofit Maximization E: What is a Market Graph? 13-3 (4) Standard 3b: Students will explain the 5 dimensions of market structure and identify how perfect competition, monopoly, monopolistic competition,
More information= AFC + AVC = (FC + VC)
Chapter 13-14: Marginal Product, Costs, Revenue, and Profit Production Function The relationship between the quantity of inputs (workers) and quantity of outputs Total product (TP) is the total amount
More informationMicro Semester Review Name:
Micro Semester Review Name: The following review is set up to emphasize certain concepts, graphs and terms. It is the responsibility of the individual teachers to emphasize and review the analysis aspects
More informationECO 2023 Principles of Microeconomics Fall 2013 Practice Test #2. 1. Which of the following are factors of production?
ECO 2023 Principles of Microeconomics Fall 2013 Practice Test #2 1. Which of the following are factors of production? A. Output in a production function. B. Productivity. C. Land, labor, capital, and entrepreneurship.
More informationPractice Exam 3: S201 Walker Fall 2009
Practice Exam 3: S201 Walker Fall 2009 I. Multiple Choice (3 points each) 1. Which of the following statements about the short-run is false? A. The marginal product of labor may increase or decrease. B.
More informationWHAT IS A COMPETITIVE MARKET?
Chapter 14. Firms in Competitive Markets WHAT IS A COMPETITIVE MARKET? A perfectly competitive market has the following characteristics: There are many buyers and sellers in the market. small relative
More informationECON 102 Brown Final Exam (New Material) Practice Exam Solutions
www.liontutors.com ECON 102 Brown Final Exam (New Material) Practice Exam Solutions 1. B A very large percent of their earnings comes from economic rent 2. B Any funds left, after everyone who has a claim
More informationFirm Behavior. Business Economics Managerial Decisions in Competitive Markets (Deriving the Supply Curve)) Perfect Competition.
Business Economics Managerial Decisions in Competitive Markets (Deriving the Supply Curve)) Thomas & Maurice, Chapter Herbert Stocker herbert.stocker@uibk.ac.at Institute of International Studies University
More informationChapter Summary and Learning Objectives
CHAPTER 11 Firms in Perfectly Competitive Markets Chapter Summary and Learning Objectives 11.1 Perfectly Competitive Markets (pages 369 371) Explain what a perfectly competitive market is and why a perfect
More informationECON 101 Introduction to Economics1
ECON 101 Introduction to Economics1 Session 11 Market Structures(Perfect Competition) Lecturer: Mrs. Hellen A. Seshie-Nasser, Department of Economics Contact Information: haseshie@ug.edu.gh College of
More informationECON 102 Brown Final Exam Practice Exam Solutions
www.liontutors.com ECON 102 Brown Final Exam Practice Exam Solutions 1. B 2. C 3. C All products are identical (homogenous) in perfect competition so there is no such thing as brand preference. 4. C Breakeven
More information2010 Pearson Education Canada
What Is Perfect Competition? Perfect competition is an industry in which Many firms sell identical products to many buyers. There are no restrictions to entry into the industry. Established firms have
More informationIf the industry s short-run supply curve equals the horizontal sum of individual firms short-run supply curves, which of the following may we infer?
Microeconomics, Module 8: Competition: Long Run (Chapter 7) Illustrative Test Questions (The attached PDF file has better formatting.) Question 8.1: Long Run Equilibrium When is a competitive profit-maximizing
More informationPerfect competition: occurs when none of the individual market participants (ie buyers or sellers) can influence the price of the product.
Perfect Competition In this section of work and the next one we derive the equilibrium positions of firms in order to determine whether or not it is profitable for a firm to produce and, if so, what quantities
More informationPerfect Competition CHAPTER14
Perfect Competition CHAPTER14 MARKET TYPES The four market types are Perfect competition Monopoly Monopolistic competition Oligopoly MARKET TYPES Perfect Competition Perfect competition exists when Many
More informationECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions
www.liontutors.com ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions 1. A A large number of firms will be able to operate in the industry because you only need to produce a small amount
More informationQuiz #4 Week 04/05/2009 to 04/11/2009
Quiz #4 Week 04/05/2009 to 04/11/2009 You have 30 minutes to answer the following 15 multiple choice questions. Record your answers in the bubble sheet. Your grade in this quiz will count for 1% of your
More informationRefer to the information provided in Figure 12.1 below to answer the questions that follow. Figure 12.1
1) A monopoly is an industry with A) a single firm in which the entry of new firms is blocked. B) a small number of firms each large enough to impact the market price of its output. C) many firms each
More informationSupply in a Competitive Market
Supply in a Competitive Market 8 Introduction 8 Chapter Outline 8.1 Market Structures and Perfect Competition in the Short Run 8.2 Profit Maximization in a Perfectly Competitive Market 8.3 Perfect Competition
More informationCONTENTS. Introduction to the Series. 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply Elasticities 37
CONTENTS Introduction to the Series iv 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply 17 3 Elasticities 37 4 Government Intervention in Markets 44 5 Market Failure 53 6 Costs of
More informationPerfect Competition. Discussion Sections next week! Other Exam-Related Information. Exam Locations 7:15pm October 29. Tuesday, October 27th:
erfect Competition Exam Locations 7:15pm October 29 2 Lecture 9 outline Read chapter 10 and the readings. The characteristics of perfectly competitive industries How a price-taking producer determines
More informationExam 1. Pizzas. (per day) Figure 1
ECONOMICS 10-008 Dr. John Stewart Sept. 30, 2003 Exam 1 Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet using a No.2 pencil. Note a)=1, b)=2
More informationTo do today: short-run production (only labor variable) To increase output with a fixed plant, a firm must increase the quantity of labor it uses.
To do today: short-run production (only labor variable) To increase output with a fixed plant, a firm must increase the quantity of labor it uses. Short-run production: only labor variable To increase
More informationThis exam contains 11 pages (including this cover page) and 12 questions.
ECON 001 Fall 2015 A. Duchene Midterm 2 November 4, 2015 Time Limit: 0 Minutes Name (Print): Recitation Section: Name of TA: Read these instructions carefully: This exam contains 11 pages (including this
More information2007 Thomson South-Western
Monopolistic Competition Characteristics: Many sellers Product differentiation Free entry and exit In the long run, profits are driven to zero Firms have some control over price What does the costs graph
More informationPerfect Competition & Welfare
Perfect Competition & Welfare Outline Derive aggregate supply function Short and Long run euilibrium Practice problem Consumer and Producer Surplus Dead weight loss Practice problem Focus on profit maximizing
More informationPerfect Competition and The Supply Curve
chapter: 13 >> Perfect Competition and The Supply Curve The following materials are taken from Chap. 13, Economics, 2 nd ed., Krugman and Wells(2009), Worth Palgrave MaCmillan. 2009 Worth Publishers 1
More information3) a) List and describe the characteristics of a perfectly competitive market.
Exercises on Perfect Competition 1) When a firm has no ability to influence market prices it is said to be in what kind of a market? 2) In a competitive market, how will the actions of any single buyer
More informationProfessor Christina Romer LECTURE 6 FIRMS AND PROFIT MAXIMIZATION FEBRUARY 1, 2018
Economics 2 Spring 2018 rofessor Christina Romer rofessor David Romer LECTURE 6 FIRMS AND ROFIT MAXIMIZATION FEBRUARY 1, 2018 I. FIRMS AND THE DECISIONS THEY MAKE A. What is a firm? B. Three decisions
More informationShort-Run Costs and Output Decisions
Semester-I Course: 01 (Introductory Microeconomics) Unit IV - The Firm and Perfect Market Structure Lesson: Short-Run Costs and Output Decisions Lesson Developer: Jasmin Jawaharlal Nehru University Institute
More informationProfessor Christina Romer SUGGESTED ANSWERS TO PROBLEM SET 2
Economics 2 Spring 2016 rofessor Christina Romer rofessor David Romer SUGGESTED ANSWERS TO ROBLEM SET 2 1.a. Recall that the price elasticity of supply is the percentage change in quantity supplied divided
More informationECON 2100 Principles of Microeconomics (Summer 2016) Behavior of Firms in Perfectly Competitive Markets
ECON 21 Principles of Microeconomics (Summer 216) Behavior of Firms in Perfectly Competitive Markets Relevant readings from the textbook: Mankiw, Ch. 14 Firms in Competitive Markets Suggested problems
More informationECO 610: Lecture 7. Perfectly Competitive Markets
ECO 610: Lecture 7 Perfectly Competitive Markets Perfectly Competitive Markets: Outline Goal: understanding firm and market supply in competitive markets Characteristics of perfectly competitive industries
More informationChief Reader Report on Student Responses:
Chief Reader Report on Student Responses: 2018 AP Microeconomics Free-Response Questions Number of Students Scored 90,032 Number of Readers 91 Score Distribution Exam Score N %At 5 18,827 20.9 4 25,070
More informationChapter 11. Microeconomics. Technology, Production, and Costs. Modified by: Yun Wang Florida International University Spring 2018
Microeconomics Modified by: Yun Wang Florida International University Spring 2018 1 Chapter 11 Technology, Production, and Costs Chapter Outline 11.1 Technology: An Economic Definition 11.2 The Short Run
More informationWhere are we? Second midterm on November 19. Review questions on th course web site. Today: chapter on perfect competition
Where are we? Second midterm on November 19 Review questions on th course web site. Today: chapter on perfect competition Topic for the second paper: Pick a chapter in Ariely after Chapter 4 and compare
More informationTextbook Media Press. CH 12 Taylor: Principles of Economics 3e 1
CH 12 Taylor: Principles of Economics 3e 1 Monopolistic Competition and Differentiated Products Monopolistic competition refers to a market where many firms sell differentiated products. Differentiated
More informationFour Market Models. 1. Perfect Competition 2. Pure Monopoly 3. Monopolistic Competition 4. Oligopoly
Four Market Models 1. Perfect Competition 2. Pure Monopoly 3. Monopolistic Competition 4. Oligopoly Perfect Competition Chapter 14 Perfect Competition Characteristics 1. Very Large Numbers Many buyers/sellers
More informationExam 3 Practice Questions
Exam 3 Practice Questions 1. The price elasticity of demand is a measure of: a) how quickly a particular market reaches equilibrium. b) the change in supply associated with lower prices. c) the percent
More informationThis exam contains 13 pages (including this cover page) and 17 questions. Check to see if any pages are missing.
ECON 001 Fall 2016 Final Exam December 21, 2016 Time Limit: 120 Minutes Name (Print): Recitation Section: Name of TA: This exam contains 13 pages (including this cover page) and 17 questions. Check to
More informationhttps://www.quia.com/servlets/quia.web.quiawebmanager?rand...
Version A Name Date Unit 4 Practice all at once 1. Refer to the following table about the production function for Terry's Widget Shoppe to answer questions 1-4. Assume labor is the only variable input
More informationEcon 98 (CHIU) Midterm 1 Review: Part A Fall 2004
Disclaimer: The review may help you prepare for the exam. The review is not comprehensive and the selected topics may not be representative of the exam. In fact, we do not know what will be on the exam.
More informationChapter 14 Perfectly competitive Market
Chapter 14 Perfectly competitive Market But first lets look at this Profit Maximization Profit Maximization This occurs where marginal revenue (MR) = marginal cost (MC). MR = MC Marginal revenue is the
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2014 15 Fall Semester ECON101 Introduction to Economics I Final Exam Type A 26 January 2015 Duration: 100 minutes
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
AUBG, Fall 2015, Principles Micro with P. Stankov, Sample MT2 NOTE: The actual no. of questions on the actual MT will be 30, each for 0.67 grade points. MULTIPLE CHOICE. Choose the one alternative that
More informationLesson 3-2 Profit Maximization
Lesson 3-2 Profit Maximization Standard 3b: Students will explain the 5 dimensions of market structure and identify how perfect competition, monopoly, monopolistic competition, and oligopoly are characterized
More informationECO 610: Lecture 7. Perfectly Competitive Markets
ECO 610: Lecture 7 Perfectly Competitive Markets Perfectly Competitive Markets: Outline Goal: understanding firm and market supply in competitive markets Characteristics of perfectly competitive industries
More informationChapter 7 Consumer/Producers and Market Efficiency
Midterm #2 Exam Study uestions: (A subset of these questions/concepts will be on the exam) Chapter 5 - Elasticity Define rice elasticity of demand. What does it mean to say demand is highly elastic? What
More informationExam 1. Price $ per minute $.55 $.30 $.25 $.05. Figure 1. a) 4 b) 5 c) d) 11 e) none
ECONOMICS 10-008 Dr. John Stewart September 24, 2002 Exam 1 Instructions: Mark the letter for your chosen answer for each question on the computer readable answer sheet using a No.2 pencil. Note =1, b)=2
More informationIntroduction. Learning Objectives. Chapter 24. Perfect Competition
Chapter 24 Perfect Competition Introduction Estimates indicate that since 2003, the total amount of stored digital data on planet Earth has increased from 5 exabytes to more than 200 exabytes. Accompanying
More informationProfessor Christina Romer LECTURE 7 COMPETITIVE FIRMS IN THE LONG RUN FEBRUARY 12, 2019
Economics 2 Spring 2019 rofessor Christina Romer rofessor David Romer LECTURE 7 COMETITIVE FIRMS IN THE LONG RUN FEBRUARY 12, 2019 I. A LITTLE MORE ON SHORT-RUN ROFIT-MAXIMIZATION A. The condition for
More informationMicroeconomics. More Tutorial at
Microeconomics 1. Economists assume that the goal of the firm is to maximize A. total revenue B. total profit C. total costs D. total satisfaction 2. If a perfectly competitive firm produces 100 units
More informationECON 260 (2,3) Practice Exam #4 Spring 2007 Dan Mallela
ECON 260 (2,3) Practice Exam #4 Spring 2007 Dan Mallela Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Profit is defined as a. net revenue
More informationmicroeconomics II first module
Lecture 2 Perfectly competitive markets Kosmas Marinakis, Ph.. Important notes 1. Homework 1 will is due on Monday 2. Practice problem set 2 is online microeconomics II first module 2013-18 Kosmas Marinakis,
More informationThis exam contains 15 pages (including this cover page) and 17 questions. Check to see if any pages are missing.
ECON 001 Fall 2016 Final Exam December 21, 2016 Time Limit: 120 Minutes Name (Print): Recitation Section: Name of TA: This exam contains 15 pages (including this cover page) and 17 questions. Check to
More informationa. Sells a product differentiated from that of its competitors d. produces at the minimum of average total cost in the long run
I. From Seminar Slides: 3, 4, 5, 6. 3. For each of the following characteristics, say whether it describes a perfectly competitive firm (PC), a monopolistically competitive firm (MC), both, or neither.
More informationFirms in Competitive Markets
Firms in Competitive Markets Yan Zeng Version 1.0.2, last revised on 2014-02-24. Abstract Study notes based on (Mankiw, 1998, pp. 263-302). The Costs of Production The amount that the firm receives for
More informationPractice Problem Set 5 (ANSWERS)
Economics 370 Professor H.J. Schuetze Practice Problem Set 5 (ANSWERS) 1. Autos Slope=-1 Slope = -2 40 A1 U2 U1 F1 F2 20 Food a) The opportunity cost of producing one more unit of food is 2 autos foregone.
More informationWednesday, October 31 Lecture: Labor Markets
Amherst College Department of Economics Economics 111 Section 3 Fall 2012 Wednesday, October 31 ecture: abor Markets abor Markets: Demand and Supply Every market includes to essential elements: demand
More informationFINAL Examination Paper (COVER PAGE) Programme : Diploma in Quantity Surveying. Time : 8.00 am am Reading Time : 10 Minutes
FINAL Examination Paper (COVER PAGE) Session : January 2013 Programme : Diploma in Quantity Surveying Course : ECO1141 : Principles of Economics Date of Examination : April 30, 2013 Time : 8.00 am 10.10
More informationAP Microeconomics [last name, first name] Pre-Test
AP Microeconomics [last name, first name] Pre-Test Directions: Use pencil only to answer the following questions. Return your completed pre-test on the first day of class. READING GRAPHS 1: Refer to the
More informationMICROECONOMICS - CLUTCH CH MONOPOLISTIC COMPETITION.
!! www.clutchprep.com CONCEPT: CHARACTERISTICS OF MONOPOLISTIC COMPETITION A market is in monopolistic competition when: Nature of Good: The goods for sale are, but not identical - Products are said to
More informationMicro Assignment 12: Marginal Cost and Profit Maximization
Amherst College Department of Economics Economics 111 Section 5 Fall 2015 Name: P.O. Box: Micro Assignment 12: Marginal Cost and Profit Maximization 1. The results from our previous assignment appear below:
More informationPerfectly Competitive Supply. Chapter 6. Learning Objectives
Perfectly Competitive Supply Chapter 6 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1.Explain how opportunity cost is related to the supply
More informationProfit Maximization. Econ 410: Micro Theory. Profit Maximization. Recall from last time. Firm Profit Maximization and Competitive Supply. q 0.
lide 1 lide 3 Econ 410: Micro Theory Firm Profit Maximization and Competitive upply Wednesday, November 14 th, 2007 Profit is positive when R(>C( Profit Maximization ince profit is equal to the difference
More informationModule 55 Firm Costs. What you will learn in this Module:
What you will learn in this Module: The various types of cost a firm faces, including fixed cost, variable cost, and total cost How a firm s costs generate marginal cost curves and average cost curves
More informationFIRMS IN COMPETITIVE MARKETS
14 FIRMS IN COMPETITIVE MARKETS WHAT S NEW IN THE FOURTH EDITION: The rules for profit maximization are written more clearly. LEARNING OBJECTIVES: By the end of this chapter, students should understand:
More informationEssential Graphs for Microeconomics
Essential Graphs for Microeconomics Basic Economic Concepts! roduction ossibilities Curve Good X A F B C W Concepts: oints on the curve-efficient oints inside the curve-inefficient oints outside the curve-unattainable
More informationmicro2 first module Basic assumptions of PC 2. Product homogeneity 1. Large number of firms Profit maximization in general 3. Free entry and exit
Lecture 2 Perfectly competitive markets Kosmas Marinakis, Ph.. Basic assumptions of PC A market is perfectly competitive when 1. Firms are many 2. Product is homogeneous 3. Entry and exit are free micro2
More informationReview Notes for Chapter Optimal decision making by anyone Engage in an activity up to the point where the marginal benefit= marginal cost
Review Notes for Chapter 5 1. Optimal decision making by anyone Engage in an activity up to the point where the marginal benefit= marginal cost Sunk costs are costs which must be borne regardless of future
More informationPrinciples of Microeconomics Module 5.1. Understanding Profit
Principles of Microeconomics Module 5.1 Understanding Profit 180 Production Choices of Firms All firms have one goal in mind: MAX PROFITS PROFITS = TOTAL REVENUE TOTAL COST Two ways to reach this goal:
More informationSyllabus item: 42 Weight: 3
1.5 Theory of the firm and its market structures - Production and costs Syllabus item: 42 Weight: 3 Definition: Total product (TP): The total output that a firm produces, using its fixed and variable factors
More information