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Lecture 2
Lecture 2

... • Since price gives revenue per unit, price relative to average cost determines if profits positive or negative • Marginal cost gives the increase in costs due to an increase in quantity produced. Formally, marginal cost is the slope of the variable cost function. ...
Mr. Maurer  Name: ____________________________ AP Economics
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... (a) Using correctly labeled side-by-side graphs of the factor market for machines and the John Lamb Company, show each of the following. (i) The equilibrium rental price of machines in the factor market, labeled as PR (ii) John Lamb’s equilibrium rental quantity of machines, labeled as QL (b) Assume ...
Monopoly Power Point Slides
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... Barriers to entry are a characteristic of a particular market that block the entry of new firms in a monopoly market. Economies of scale lead to natural monopoly which is a firm that confronts economies of scale over the entire range of outputs demanded in its industry. Location Sunk costs are expen ...
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... 6. The price elasticity of supply is a measure of the responsiveness of: the quantity supplied to the changes in price. 7. If the demand curve is a vertical line, it means that: regardless of price, the quantity demanded is a constant amount. 8. The total revenue of Grandma's Fudge Factory is equal ...
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... This entry shifts the short-run supply curve to the right from S1 to S2, as shown in panel (c). In the new long-run equilibrium, point C, price has returned to P1 but the quantity sold has increased to Q3. Profits are again zero, price is back to the minimum of average total cost, but the market has ...
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... This entry shifts the short-run supply curve to the right from S1 to S2, as shown in panel (c). In the new long-run equilibrium, point C, price has returned to P1 but the quantity sold has increased to Q3. Profits are again zero, price is back to the minimum of average total cost, but the market has ...
Chapter 14 - Firms in competitive markets
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... This entry shifts the short-run supply curve to the right from S1 to S2, as shown in panel (c). In the new long-run equilibrium, point C, price has returned to P1 but the quantity sold has increased to Q3. Profits are again zero, price is back to the minimum of average total cost, but the market has ...
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... 5) The above figure shows the supply and demand curves for rice in the U.S. and in Japan. Assume there is no trade between the two countries. If bad weather causes the supply curves in each country to shift leftward by the same amount, then A) the price will increase the same amount in both countrie ...
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... D) In the short run, a perfectly competitive firm can earn: 1. an economic profit when price is greater than min ATC. 2. a normal profit when price is equal to min ATC. 3. an economic loss when price is less than min ATC. E) The supply curve of a perfectly competitive firm is its marginal cost curve ...
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...  Pure Competition  Monopolistic Competition  Oligopoly  Pure Monopoly ...
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... Offers a wide range of B2B sites or portals, some of which are specialist where suppliers of specific industrial goods can interface with potential buyers. Geographic where sellers from other countries advertise diverse products. Advances in Internet infrastructure, business processes and software m ...
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... b) Label and state equilibrium price and quantity (P 1, Q1). c) Supply decreases due to Dragon Airline’s Bankruptcy (Filing Chapter 7) by one flight per day or 1750 people. Draw the new supply curve, label it S2. What is the new equilibrium price and quantity for a coach fare? Label the new equilibr ...
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Sample Midterm

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Factor Markets

... 1. Economic concepts are similar to those for product markets. 2. The demand for a factor of production is derived from the demand for the good or service produced from this resource. 3. A firm tries to hire additional units of a resources up to the point where the resource’s marginal revenue produc ...
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... Diminishing marginal returns- occurs when marginal production levels decrease with new investment. ...
CHAPTER 1
CHAPTER 1

... marginal costs, so that both the average total cost and marginal total cost curves slope downward. They have large fixed costs that present a potentially insurmountable economic barrier to entry. Having more than one firm bearing these fixed costs is not cost efficient. Therefore, these types of fir ...
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Perfect competition

In economic theory, perfect competition (sometimes called pure competition) describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. As a Pareto efficient allocation of economic resources, perfect competition serves as a natural benchmark against which to contrast other market structures.
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