# Cost ATC AVC MC Output 2

Size: px
Start display at page:

Transcription

1 Intermediate Microeconomics Answers to second midterm 1.a. The firm s short run supply curve is the portion of the marginal cost curve on and above the minimum of average variable cost, and zero for prices below the minimum of average variable cost. So we have to find the intersection of the marginal cost curve with the average variable cost curve. The marginal cost function is the derivative of the total cost function. Thus, the marginal cost function is MC(q) = q + 3q 2. The variable cost function is the portion of total cost that depends on q. This is V C(q) = 1200q 20q 2 + q 3. Average variable cost is this divided by q, or AV C(q) = q + q 2. Setting marginal cost equal to average variable cost, we have q + 3q 2 = q + q 2. Rearranging, we get 2q 2 = 20q. The solutions to this are q = 0 and q = 10. At q = 0, the average variable cost is decreasing, so it is not a minimum of AV C. The relevant solution is q = 10. At q = 10, MC(q) = (10) + 3(100) = So the firm s short run supply curve is q +3q 2 for q 10 and has q = 0 for P < b. A firm s average variable cost is increasing when marginal cost exceeds average variable cost, and is decreasing when marginal cost is lower than average variable cost. The marginal cost curve intersects the average variable cost curve at the minimum of average variable cost. The firm s long run average cost curve is the lower envelope of all its short run average total cost curves. Given a quantity of output, the firm s long run cost of producing that quantity is the short run cost of producing it using the optimal short run production process. For example, if the firm knows that in the long run it will be producing q units of a good, it will choose the firm size that leads to production of q units at minimum cost over all firm sizes. 1

2 Cost MC ATC AVC Output 2

3 Cost SAC1 SAC3 SAC2 LAC Quantity c. These hotels remain open because in the short run their fixed costs are sunk, and they cannot retrieve them no matter what they do. They may be making negative profits in the short run, but their prices are above average variable costs. In the longer run, considering the whole year, they expect to make positive or zero profits (otherwise they would go out of business). It would be costly to stop maintaining the hotels during the off season and then have to fix everything and rehire workers when the hotels reopen. d. When firms are earning zero economic profits, it means they are doing just as well as the next best activity they could be employing their resources in. The firms are covering their opportunity costs, which include the costs of not investing their capital in the next most productive area. So they are indifferent, and might as well stay in the market. 2.a. The manufacturer is not minimizing its costs. Labor and machinery are equally productive, but machinery costs more than labor. Therefore to minimize costs the manufacturer should use 10 hours of labor and no machinery to produce a rug. Formally, the slope of an isoquant is 1 everywhere, as its equation is L + K = 10. The slope of an isocost line is 1/2, as its equation is 20L + 40K = C. Therefore the lowest-cost isocost line touching the isoquant corresponding to 1 rug touches it at (10, 0). 3

4 Capital Isoquant Isocost line Optimal input combination Labor b. The condition is MP L /MP K = P L /P K. This is the condition that ensures that the slope of the isoquant ( MRT S = MP L /MP K ) equals the slope of the isocost curve ( P L /P K ). If the slopes were different so that MP L /MP K > P L /P K, costs could be decreased by increasing the amount of labor and decreasing the amount of capital, while continuing to produce the same amount. If MP L /MP K < P L /P K, costs could be decreased by increasing the amount of capital and decreasing the amount of labor, while keeping output the same. 3.a. If absolutely all inputs can be duplicated at every quantity, the firm cannot have decreasing returns, it must have either increasing returns or constant returns. By replicating the firm exactly, one would get at least constant returns. Decreasing returns functions such as F (L, K) = L + K come about because there are other inputs which are implicitly not being counted. Similarly, when a firm experiences decreasing returns due to an input getting more expensive when a lot of it has been bought, it is because there is some part of that input that is in fixed supply and cannot be replicated. b. A firm has increasing returns to scale if, when inputs double, output more than doubles. Indivisibility of some inputs can lead to increasing returns to 4

5 scale, because you might need an integer amount of some input to get any output at all. Thus, when you divide that integer amount by 2, output is divided by more than 2. c. Each firm is making zero profits, and is producing at the minimum of long run average cost. If price were raised above the minimum of long run average cost (for example due to a demand shock), firms would make positive profit, other firms would enter the market, short run supply would increase and price would decrease until profits were zero again and each firm producing at the minimum of long run average cost. 4.a. A monopolist finds the quantity to produce at the intersection of MC and MR curves, then finds price as the height of the demand curve at that quantity. Costs, Price P* MC AC MR D Q* Q b. The marginal costs in the two plants should be equal (quantities produced need not be equal). 5. The market s outcome is less efficient with the ceiling. Deadweight loss is as shown in the graph. Those consumers that are able to get apartments are better off, but those that do not get apartments, but would have been willing 5

6 to rent one at the original equilibrium price, are worse off. Producers are worse off. price Producer surplus Deadweight loss S P0 Pmax Gain to consumers D Q1 Q0 Q2 quantity 6

### Eco 300 Intermediate Micro

Eco 300 Intermediate Micro Instructor: Amalia Jerison Office Hours: T 12:00-1:00, Th 12:00-1:00, and by appointment BA 127A, aj4575@albany.edu A. Jerison (BA 127A) Eco 300 Spring 2010 1 / 66 Page 261,

### Faculty of Economics, Thammasat University EE 211 Principles of Microeconomics (3 credits)

Faculty of Economics, Thammasat University EE 211 Principles of Microeconomics (3 credits) Semester 1/2014 ----------------------------------------------------------------------------------------------

### Faculty of Economics, Thammasat University EE 211 Principles of Microeconomics (3 credits)

Lecture Time: Lecture Venue: Instructor: Faculty of Economics, Thammasat University EE 211 Principles of Microeconomics (3 credits) Semester 1/2015 ----------------------------------------------------------------------------------------------

### Costs: Introduction. Costs 26/09/2017. Managerial Problem. Solution Approach. Take-away

Costs Costs: Introduction Managerial Problem Technology choice at home versus abroad: In western countries, firms use relatively capital-intensive technology. Will that same technology be cost minimizing

Commerce 295 Midterm Answers October 27, 2010 PART I MULTIPLE CHOICE QUESTIONS Each question has one correct response. Please circle the letter in front of the correct response for each question. There

### The Behavior of Firms

Chapter 5 The Behavior of Firms This chapter focuses on how producers make decisions regarding supply. Individuals demand goods and services. Firms supply goods and services. An important assumption is

### 1. Fill in all requested information above and on the answer sheet.

Economics 101 Professor H. Quirmbach Second Midterm Exam PRINT NAME STUDENT ID NO. DISCUSSION GROUP TIME SCORE INSTRUCTIONS: 1. Fill in all requested information above and on the answer sheet. 2. There

### Market structure 1: Perfect Competition The perfectly competitive firm is a price taker: it cannot influence the price that is paid for its product.

Market structure 1: Perfect Competition The perfectly competitive firm is a price taker: it cannot influence the price that is paid for its product. This arises due to consumers indifference between the

### Question Paper Business Economics I (MB1B3): January 2009

Question Paper Business Economics I (MB1B3): January 2009 Answer all 78 questions. Marks are indicated against each question. 1. Which of the following is not responsible for an increase in demand for

### Chapter 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

### ECON 2100 Principles of Microeconomics (Summer 2016) Monopoly

ECON 21 Principles of Microeconomics (Summer 216) Monopoly Relevant readings from the textbook: Mankiw, Ch. 15 Monopoly Suggested problems from the textbook: Chapter 15 Questions for Review (Page 323):

### Math Recitation #5 October 20, 2009

Math Recitation #5 October 20, 2009 I. Production functions II. Isoquants and isocost lines III. Increasing, decreasing and constant returns to scale IV. Costs (average, marginal, total) V. Perfect competition

### Practice 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

### Decision Time Frames Pearson Education

11 OUTPUT AND COSTS Decision Time Frames The firm makes many decisions to achieve its main objective: profit maximization. Some decisions are critical to the survival of the firm. Some decisions are irreversible

### Unit 5. Producer theory: revenues and costs

Unit 5. Producer theory: revenues and costs Learning objectives to understand the concept of the short-run production function, describing the relationship between the quantity of inputs and the quantity

### Practice Final Exam. Write an expression for each of the following cost concepts. [each 5 points]

Practice Final Exam Total : 200 points Exam time: 7:00 9:00. You have 6 questions in 3 pages. Please make your diagrams clear and label it. Good Luck! 1. Amy is currently spending her income to maximize

### 1. True or False. If the marginal product of labor is decreasing, then the average product of labor must also be decreasing. Explain.

ECO 220 Intermediate Microeconomics Professor Mike Rizzo Second COLLECTED Problem Set SOLUTIONS This is an assignment that WILL be collected and graded. Please feel free to talk about the assignment with

### ECON 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

### CONTENTS. 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

### Microeconomics II. Discussion Class Durban

Microeconomics II Discussion Class Durban 1 What to expect? Discussion classes are: overview of the course We focus on what we think are challenging & non revision concepts Give you a start to understanding

### Contents. Introduction

Contents Chapter 1 Introduction Introduction to Economics... 1 Meaning of Economics... 1 Definitions of Economics... 2 Introduction to Economic Theory... 3 The Structure of Theories... 5 Importance of

### Homework 4 Economics

Homework 4 Economics 501.01 Manisha Goel Due: Tuesday, March 1, 011 (beginning of class). Draw and label all graphs clearly. Show all work. Explain. Question 1. Governments often regulate the price of

### Principles 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:

Econ 226 Principles of Microeconomics Fall, 24 Dr. Kathryn Wilson Due Date: Tuesday, September 28 th Homework 2 Answer Key 1. When the of movie admissions increases from \$7 to \$8, the demanded falls from

### Production and Cost Analysis I

CHAPTER 12 Production and Cost Analysis I Production is not the application of tools to materials, but logic to work. Peter Drucker McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All

### Short-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

### ECON 251 Practice Exam 2 Questions from Fall 2013 Exams

ECON 251 Practice Exam 2 Questions from Exams Gordon spends all his income on spatulas and mixing bowls. Spatulas cost \$4 and mixing bowls cost \$12. Gordon has \$60 of income and considers both spatulas

### ECON 101 Introduction to Economics1

ECON 101 Introduction to Economics1 Session 10 Cost Concept Lecturer: Mrs. Hellen A. Seshie-Nasser, Department of Economics Contact Information: haseshie@ug.edu.gh College of Education School of Continuing

### Exam 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

### AP Microeconomics Review Session #3 Key Terms & Concepts

The Firm, Profit, and the Costs of Production 1. Explicit vs. implicit costs 2. Short-run vs. long-run decisions 3. Fixed inputs vs. variable inputs 4. Short-run production measures: be able to calculate/graph

### AP Microeconomics Chapter 10 Outline

I. Learning Objectives In this chapter students should learn: A. How the long run differs from the short run in pure competition. B. Why profits encourage entry into a purely competitive industry and losses

### FINALTERM EXAMINATION FALL 2006

FINALTERM EXAMINATION FALL 2006 QUESTION NO: 1 (MARKS: 1) - PLEASE CHOOSE ONE Compared to the equilibrium price and quantity sold in a competitive market, a monopolist Will charge a price and sell a quantity.

### Profit. Total Revenue The amount a firm receives for the sale of its output. Total Cost The market value of the inputs a firm uses in production.

Profit Total Revenue The amount a firm receives for the sale of its output. Total Cost The market value of the inputs a firm uses in production. Profit is the firm s total revenue minus its total cost.

### Contents. Concepts of Revenue I-13. About the authors I-5 Preface I-7 Syllabus I-9 Chapter-heads I-11

Contents About the authors I-5 Preface I-7 Syllabus I-9 Chapter-heads I-11 1 Concepts of Revenue 1.1 Introduction 1 1.2 Concepts of Revenue 2 1.3 Revenue curves under perfect competition 3 1.4 Revenue

### 2007 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

### Which store has the lower costs: Wal-Mart or 7-Eleven? 2013 Pearson

Which store has the lower costs: Wal-Mart or 7-Eleven? Production and Cost 14 When you have completed your study of this chapter, you will be able to 1 Explain and distinguish between the economic and

### 2) All combinations of capital and labor along a given isoquant cost the same amount.

Micro Problem Set III WCC Fall 2014 A=True / B=False 15 Points 1) If MC is greater than AVC, AVC must be rising. 2) All combinations of capital and labor along a given isoquant cost the same amount. 3)

### Chapter 13. Microeconomics. Monopolistic Competition: The Competitive Model in a More Realistic Setting

Microeconomics Modified by: Yun Wang Florida International University Spring, 2018 1 Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting Chapter Outline 13.1 Demand and

### Slides and Images, Worth Publishers Inc. 8-1

Perfect Competition Michael J. Murray Slides and Images, Worth Publishers Inc. 8-1 Market Structure Analysis By observing a few industry characteristics, we can predict pricing and output behavior of the

### Understanding Markets

Understanding Markets EC8005 Lecture 7 2014 Michael King 1 Revision: Consumer Theory 1. Qd = f(p,ps, Pc, Y, T, O) 2. Sd = f(p, T, I, G, Tx, Sy, O) 3. Types of goods 4. Shift along v s shift in demand/supply

### Essential 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

### Comm295 Midterm Review Package. October, Content:

Managerial Economics Comm295 Midterm Review Package October, 20 2014 Supply and Demand Elasticity Regression Analysis Consumer Choice Production Cost Concepts Profit Maximization Perfect Competition Monopoly

### Chapter 6 Perfectly Competitive Markets

Chapter 6 Perfectly Competitive Markets 1. A firm sells a product in a perfectly competitive market, at a price of \$50. The firm has a fixed cost of \$30. Fill in the following table and indicate the level

### ECON 2100 Principles of Microeconomics (Summer 2016) The Production Process and Costs of Production

ECON 21 Principles of Microeconomics (Summer 216) The Production Process and of Production Relevant readings from the textbook: Mankiw, Ch. 13 The of Production Suggested problems from the textbook: Chapter

### Chapter 8 Profit Maximization and Competitive Supply. Read Pindyck and Rubinfeld (2013), Chapter 8

Chapter 8 Profit Maximization and Competitive Supply Read Pindyck and Rubinfeld (2013), Chapter 8 1/29/2017 CHAPTER 8 OUTLINE 8.1 Perfectly Competitive Market 8.2 Profit Maximization 8.3 Marginal Revenue,

### ECON 251 Exam 2 Pink. Fall 2012

ECON 251 Exam 2 Pink Use the table below to answer the following four questions The table below shows Harry s total utility from consuming beer and wine. The price of beer is \$2 per bottle. The price of

### Perfectly Competitive Markets

Characteristics: Fragmented: Many small firms, none of which have market power Undifferentiated Products: Products that consumers perceive as being identical. Perfect Pricing Information: Consumers have

### Monopoly. 3 Microeconomics LESSON 5. Introduction and Description. Time Required. Materials

LESSON 5 Monopoly Introduction and Description Lesson 5 extends the theory of the firm to the model of a Students will see that the profit-maximization rules for the monopoly are the same as they were

### Monopolistic Markets. Causes of Monopolies

Monopolistic Markets Causes of Monopolies The causes of monopolization Monoplositic resources Only one firm owns a resource which is crucial for production (e.g. diamond monopol of DeBeers). Monopols created

### Micro Economics M.A. Economics (Previous) External University of Karachi Micro-Economics

Micro Economics M.A. Economics (Previous) External University of Karachi Micro-Economics Annual Examination 1997 Time allowed: 3 hours Marks: 100 Maximum 1) Attempt any five questions. 2) All questions

### Chapter 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

### 23 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

### Managerial Economics Chapter 9 Practice Question

ECO 3320 Lanlan Chu Managerial Economics Chapter 9 Practice Question 1. The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the

### Coffee is produced at a constant marginal cost of \$1.00 a pound. Due to a shortage of cocoa beans, the marginal cost rises to \$2.00 a pound.

Microeconomics, Module 11: Monopoly (Chapter 10) Illustrative Test Questions (The attached PDF file has better formatting.) Updated: June 27, 2005 Question 11.1: Monopoly All but which of the following

### MICROECONOMICS II - REVIEW QUESTIONS I

MICROECONOMICS II - REVIEW QUESTIONS I. What is a production function? How does a long-run production function differ from a short-run production function? A production function represents how inputs are

### Econ 001: Midterm 2 (Dr. Stein) Answer Key Nov 13, 2007

Instructions: Econ 001: Midterm 2 (Dr. Stein) Answer Key Nov 13, 2007 This is a 60-minute examination. Write all answers in the blue books provided. Show all work. Use diagrams where appropriate and label

### Total Costs. TC = TFC + TVC TFC = Fixed Costs. TVC = Variable Costs. Constant costs paid regardless of production

AP Microeconomics Total Costs TC = TFC + TVC TFC = Fixed Costs Constant costs paid regardless of production TVC = Variable Costs Costs that vary as production is changed Cost TFC TVC TFC Output Profit

### Microeonomics. 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

### Practice Midterm Exam Microeconomics: Professor Owen Zidar

Practice Midterm Exam Microeconomics: 33001 Professor Owen Zidar This exam is comprised of 3 questions. The exam is scheduled for 1 hour and 30 minutes. This is a closed-book, closed-note exam. There is

### ADVANCED PLACEMENT MICROECONOMICS Maple Grove Senior High School Jeff Rush Social Studies Department

ADVANCED PLACEMENT MICROECONOMICS Maple Grove Senior High School Jeff Rush rushj@district279.org Social Studies Department Required textbook Economics, McConnell and Brue, 17 th edition, 2008. Course description

### ECON 115. Industrial Organization

ECON 115 Industrial Organization 1. Tonight is a calculus review. 2. And a review of basic microeconomics. 3. We will do a couple of problems in class. First hour: Calculus Thinking on the margin. Introducing

### ECON 311 MICROECONOMICS THEORY I

ECON 311 MICROECONOMICS THEORY I Profit Maximisation & Perfect Competition (Short-Run) Dr. F. Kwame Agyire-Tettey Department of Economics Contact Information: fagyire-tettey@ug.edu.gh Session Overview

### Use the following to answer question 4:

Homework Chapter 11: Name: Due Date: Wednesday, December 4 at the beginning of class. Please mark your answers on a Scantron. It is late if your Scantron is not complete when I ask for it at 9:35. Get

### Notes on Chapter 10 OUTPUT AND COSTS

Notes on Chapter 10 OUTPUT AND COSTS PRODUCTION TIMEFRAME There are many decisions made by the firm. Some decisions are major decisions that are hard to reverse without a big loss while other decisions

### Monopoly and How It Arises

Monopoly and How It Arises A monopoly is a market: That produces a good or service for which no close substitute exists In which there is one supplier that is protected from competition by a barrier preventing

### Introduction to Agricultural Economics Agricultural Economics 105 Spring 2012 Second Hour Exam Version 1

Name Introduction to Agricultural Economics Agricultural Economics 105 Spring 2012 Second Hour Exam Version 1 There is only ONE correct answer per multiple choice question. Please put your answer on the

### T ( P ( ) * FA F D A S

Supply and Demand Basics Law of Supply Law of Demand Equilibrium Key Topics Demand Supply Equilibrium (shortage/surplus) Floor/Ceiling Elasticity Indifference Curves Utility Physical Product (Supply Side)

### Eco 685 Graphs, Tables, and Definitions

Eco 685 Graphs, Tables, and Definitions David L. Kelly 1 1 Department of Economics, University of Miami dkelly@miami.edu Fall, 2017 Introduction Introduction Managerial Economics Definition Definition

### CHAPTER NINE MONOPOLY

CHAPTER NINE MONOPOLY This chapter examines how a market controlled by a single producer behaves. What price will a monopolist charge for his output? How much will he produce? The basic characteristics

### Monopolistic Competition

Monopolistic Competition CHAPTER16 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Describe and identify monopolistic competition. 2 Explain how

### CIA4U Practice Test & Answer Key Unit #2: The Production Run

CIA4U Practice Test & Answer Key Unit #2: The Production Run Note: Expect 15 to 20 multiple-choice questions and 5 to 10 matching questions on the actual test. Practice these styles of questions in the

### Chapter 11. Monopoly. I think it s wrong that only one company makes the game Monopoly. Steven Wright

Chapter 11 Monopoly I think it s wrong that only one company makes the game Monopoly. Steven Wright Chapter 11 Outline 11.1 Monopoly Profit Maximization 11.2 Market Power 11.3 Welfare Effects of Monopoly

### A monopoly market structure is one characterized by a single seller of a unique product with no close substitutes.

These notes provided by Laura Lamb are intended to complement class lectures. The notes are based on chapter 12 of Microeconomics and Behaviour 2 nd Canadian Edition by Frank and Parker (2004). Chapter

### Chapter 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

### 11.1 Monopoly Profit Maximization

11.1 Monopoly Profit Maximization CHAPTER 11 MONOPOLY A monopoly is the only supplier of a good for which there is no close substitute. Monopolies are not price takers like competitive firms Monopoly output

### Monopolistic Markets. Regulation

Monopolistic Markets Regulation Comparison of monopolistic and competitive equilibrium output The profits of a monopolist are maximized when MC(Q M ) = P(Q M ) + Q P (Q M ) negative In a competitive market:

### Level 3 Economics, 2015

91400 914000 3SUPERVISOR S Level 3 Economics, 2015 91400 Demonstrate understanding of the efficiency of different market structures using marginal analysis 2.00 p.m. Wednesday 18 November 2015 Credits:

### ECMC02H Intermediate Microeconomics - Topics in Price Theory

1 ECMC02H Intermediate Microeconomics - Topics in Price Theory Answers to the Term Test June 23, 2010 Version A of the test Your name (Print clearly and underline your last name) Your student number 1.

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

### ECON 300 Homework 7 **This homework is for your own benefit and it not turned in**

ECON300Homework7 **Thishomeworkisforyourownbenefitanditnotturnedin** Chapter11questions:3,9,10,14,16,20,25,26,30,41 Chapter12questions:3,7,13,16,18,39 Chapter13questions:1,3,21,26(partaonly) Answers Chapter11questions:

### 1.3. Levels and Rates of Change Levels: example, wages and income versus Rates: example, inflation and growth Example: Box 1.3

1 Chapter 1 1.1. Scarcity, Choice, Opportunity Cost Definition of Economics: Resources versus Wants Wants: more and better unlimited Versus Needs: essential limited Versus Demand: ability to pay + want

### Section I (20 questions; 1 mark each)

Foundation Course in Managerial Economics- Solution Set- 1 Final Examination Marks- 100 Section I (20 questions; 1 mark each) 1. Which of the following statements is not true? a. Societies face an important

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Sample Test 3 Ch 10-13 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A cost incurred in the production of a good or service and for which

### Supply 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

### Monopoly. PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University

15 Monopoly PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Market power Why Monopolies Arise Alters the relationship between a firm s costs and the selling price Monopoly

### Making choices in a world of scarcity means we must pass up some goods and services. Every decision we make is a trade-off:

Lecture Notes Chapter 1 - The Art and Science of Economic Analysis Introduction Economics is about choices. Definition: Scarcity: A resource is scarce when it is not freely available - when its price exceeds

### Pledge (sign) I did not copy another student s answers

Economics 4020 Dr. Rupp Test #1 Fri. Sept 23 rd, 2011 20 Multiple Choice questions (2.5 points each) Pledge (sign) I did not copy another student s answers 1. The profit maximization rule for a firm is

### Introduction to Agricultural Economics Agricultural Economics 105 Spring 2011

Name Section (1 point) Introduction to Agricultural Economics Agricultural Economics 105 Spring 2011 Second Hour Exam Version 1 For the multiple choice questions, circle the most correct answer, there

### I enjoy teaching this class. Good luck and have a nice Holiday!!

ECON 202-501 Fall 2008 Xiaoyong Cao Final Exam Form A Instructions: The exam consists of 2 parts. Part I has 35 multiple choice problems. You need to fill the answers in the table given in Part II of the

### What 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)

### Marginal willingness to pay (WTP). The maximum amount a consumer will spend for an extra unit of the good.

McPeak Lecture 10 PAI 723 The competitive model. Marginal willingness to pay (WTP). The maximum amount a consumer will spend for an extra unit of the good. As we derived a demand curve for an individual

### Econ Microeconomic Analysis and Policy

ECON 500 Microeconomic Theory Econ 500 - Microeconomic Analysis and Policy Monopoly Monopoly A monopoly is a single firm that serves an entire market and faces the market demand curve for its output. Unlike

### ECON 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

### a. 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.

### Chapter 28 The Labor Market: Demand, Supply, and Outsourcing

Chapter 28 The Labor Market: Demand, Supply, and Outsourcing Learning Objectives After you have studied this chapter, you should be able to 1. define marginal factor cost, marginal physical product of

### Perfect 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.

What is Economics? Economics is the study of how we the people engage ourselves in production, distribution and consumption of goods and services in a society. Normative economics: Normative economics

### Please recall how TP, MP and AP are plotted

Please recall how TP, MP and AP are plotted The Marginal Revenue Product (MRP) The increase in total revenue for every additional labor unit employed. Units of Labor TP MP Product Price TR MRP ( TR/ L)