Slide 1 - Har Wai Mun
... 6.2 Short-run Decision: Profit Maximization If MR < MC, it would pay for the firm to decrease output as the saving in cost would be bigger than loss in revenue If the MR > MC, additional revenue will more than additional cost, thus it would be better off for the firm to increase output The only poin ...
... 6.2 Short-run Decision: Profit Maximization If MR < MC, it would pay for the firm to decrease output as the saving in cost would be bigger than loss in revenue If the MR > MC, additional revenue will more than additional cost, thus it would be better off for the firm to increase output The only poin ...
Chapter 7 Problem 2 - the School of Economics and Finance
... • DWL is the reduction in the sum of consumer surplus and producer surplus results from the adoption of a policy. • The size of deadweight loss depends on the reduction in the quantity sold • The reduction in the quantity sold will depend upon the elasticity of demand and supply – The more elastic d ...
... • DWL is the reduction in the sum of consumer surplus and producer surplus results from the adoption of a policy. • The size of deadweight loss depends on the reduction in the quantity sold • The reduction in the quantity sold will depend upon the elasticity of demand and supply – The more elastic d ...
CHAPTER 12 Pricing CHAPTER OUTLINE 12.1 Why and How Firms
... Because only firms with market power can price discriminate, price discrimination is not observed in competitive markets. It may be possible, however, to price discriminate in monopolistically competitive markets. If retail gasoline stations are monopolistically competitive rather than purely compet ...
... Because only firms with market power can price discriminate, price discrimination is not observed in competitive markets. It may be possible, however, to price discriminate in monopolistically competitive markets. If retail gasoline stations are monopolistically competitive rather than purely compet ...
KOF - ETH Zürich
... • In the short run, when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost. • In the long run, when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than aver ...
... • In the short run, when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost. • In the long run, when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than aver ...
KOF - Webarchiv ETHZ / Webarchive ETH
... • In the short run, when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost. • In the long run, when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than aver ...
... • In the short run, when a firm cannot recover its fixed costs, the firm will choose to shut down temporarily if the price of the good is less than average variable cost. • In the long run, when the firm can recover both fixed and variable costs, it will choose to exit if the price is less than aver ...
Ch05 my ppt
... Law of Demand The benefit of an activity equals the highest price we’d be willing to pay to pursue it (i.e., the reservation price). As the cost of an activity rises and exceeds the reservation price, less of the activity will be pursued. ...
... Law of Demand The benefit of an activity equals the highest price we’d be willing to pay to pursue it (i.e., the reservation price). As the cost of an activity rises and exceeds the reservation price, less of the activity will be pursued. ...
Econ 101, section 5, S01
... average total cost is $4/unit. To maximize profit (or minimize loss) in the short run, the firm should a. maintain its current output. b. increase output. *. decrease output, but not shut down. d. impossible to determine without more information. 12. Under which of the following circumstances would ...
... average total cost is $4/unit. To maximize profit (or minimize loss) in the short run, the firm should a. maintain its current output. b. increase output. *. decrease output, but not shut down. d. impossible to determine without more information. 12. Under which of the following circumstances would ...
Lecture 4: The Demand for Labor
... The Effect of Change in w Increase in w: (1)Substitution Effect As w increase, labor cost rises, and more capital and less labor are used in the production process. (2) Scale effect The new-profit-maximizing level of production will be less. How much less cannot be determined unless we know somet ...
... The Effect of Change in w Increase in w: (1)Substitution Effect As w increase, labor cost rises, and more capital and less labor are used in the production process. (2) Scale effect The new-profit-maximizing level of production will be less. How much less cannot be determined unless we know somet ...
demand - Business-TES
... What is ‘market demand’? Market demand is the sum of the individual demand for a product from each consumer in the market. If more people enter the market and they have the ability to pay for items on sale, then demand at each price level will rise. What is ‘effective demand’ and ‘willingness to pay ...
... What is ‘market demand’? Market demand is the sum of the individual demand for a product from each consumer in the market. If more people enter the market and they have the ability to pay for items on sale, then demand at each price level will rise. What is ‘effective demand’ and ‘willingness to pay ...
Lecture_06.3 Market Faiulre - Monopolies
... A Couple of Questions • Since the Monopolist is earning an economic profit, why aren’t other firms entering the market and dissipating the “economic rent”? ...
... A Couple of Questions • Since the Monopolist is earning an economic profit, why aren’t other firms entering the market and dissipating the “economic rent”? ...
Measurement and Interpretation of Elasticities
... Useful concept to producers to help form price expectations Example USDA projects an additional 2% of supply will come on the market, what happens to price. If supply increases ...
... Useful concept to producers to help form price expectations Example USDA projects an additional 2% of supply will come on the market, what happens to price. If supply increases ...
Chapter 2
... A demand curve shows the quantity demanded as a function of price, other things equal. Generally, the demand curve slopes downward. Changes in price are represented by movements along the demand curve, while changes in other factors, such as income, the prices of related products, and advertising, a ...
... A demand curve shows the quantity demanded as a function of price, other things equal. Generally, the demand curve slopes downward. Changes in price are represented by movements along the demand curve, while changes in other factors, such as income, the prices of related products, and advertising, a ...
Supply and Demand Analysis Multiple Choice A relationship that
... price and I is income. Supply is given by Qs = 5P, where Qs is quantity supplied. When I = 200, equilibrium quantity is a) ...
... price and I is income. Supply is given by Qs = 5P, where Qs is quantity supplied. When I = 200, equilibrium quantity is a) ...
Old Midterm Exams of three years with answer
... a. it still would not be producing efficiently. b. there would be no gain in either bathtubs or barrels. c. it would be producing more barrels and more bathtubs than at point C. d. It is not possible for this economy to move from point C to point E without additional resources. ...
... a. it still would not be producing efficiently. b. there would be no gain in either bathtubs or barrels. c. it would be producing more barrels and more bathtubs than at point C. d. It is not possible for this economy to move from point C to point E without additional resources. ...
Review Questions – ECMC42 – February 2004
... 9. What is second-degree price discrimination? What is self-selection? What do sellers need to know about buyers in order for second-degree price discrimination to work? Give examples of second-degree price discrimination. If the monopolist creates two different price-quantity packages, offered on a ...
... 9. What is second-degree price discrimination? What is self-selection? What do sellers need to know about buyers in order for second-degree price discrimination to work? Give examples of second-degree price discrimination. If the monopolist creates two different price-quantity packages, offered on a ...
Midterm II with Answers
... 15. Suppose that population increases and at every price market demand changes by 20 units. Once this industry returns to long run equilibrium the number of firms in the industry will be a. 7 firms. b. 2 firms. c. 5 firms. d. 6 firms. 16. Holding everything else constant, the more inelastic the supp ...
... 15. Suppose that population increases and at every price market demand changes by 20 units. Once this industry returns to long run equilibrium the number of firms in the industry will be a. 7 firms. b. 2 firms. c. 5 firms. d. 6 firms. 16. Holding everything else constant, the more inelastic the supp ...
Supply and demand
In microeconomics, supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.The four basic laws of supply and demand are: If demand increases (demand curve shifts to the right) and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. If demand decreases (demand curve shifts to the left) and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply increases (supply curve shifts to the right), a surplus occurs, leading to a lower equilibrium price. If demand remains unchanged and supply decreases (supply curve shifts to the left), a shortage occurs, leading to a higher equilibrium price.↑